Tomorrow’s fiscal statement is an important first test for the new government. Fiona Duggan wonders whether it will kickstart a green energy revolution or leave the UK ill-equipped to cope with a hugely expensive and seemingly never-ending crisis

Fiona Duggan Ashden Policy Lead

Fiona Duggan is impact and policy lead at climate solutions charity Ashden 

All eyes tomorrow will be on Kwasi Kwarteng’s mini-budget. It is expected that he will announce one of the biggest funding commitments since the Second World War, but will the spending plan deliver what the nation needs at this time of energy crisis and, importantly, show who will pay for it?

Two weeks ago, Liz Truss’s energy plan announcement bought the government time by capping the unit energy price for the next two years. This gave some – but not enough – relief to households worried about how to feed their families and pay their fuel bills this winter.

In the days that followed, however, it was criticised for being a short-term fix, not targeted towards the most vulnerable and lacking detail on the key elements needed to dig the UK out of the energy crisis through a rapid scale-up of renewables and a nationwide retrofit programme.

Instead, the new prime minster set out a muddled plan prioritising fracking and more oil and gas drilling, cementing the UK’s reliance on fossil fuels, when the country needs to urgently transition away from their stranglehold and meet climate targets.

All efforts should be put into driving the modernisation of the UK’s housing stock by supporting the best energy efficiency providers this country has to offer

If the UK is to use the borrowed time afforded by the energy price unit cap, all efforts should be put into driving the modernisation of the UK’s housing stock by supporting the best energy efficiency providers this country has to offer.

These include firms such as Kensa Heat Pumps, a ground source heat pump manufacturer and installer, and robotic insulation specialist Q-Bot as well as  organisations that provide retrofit training such as Carbon Co-op, B4Box and Low Carbon Academy.

These types of innovations will help to stop money, carbon and heat leaking out of our homes, while at the same time generating thousands of high-quality local jobs.

But these green industries will only flourish if Kwarteng takes a bold leap and confirms that the £9.2bn committed to retrofit and low carbon heat in the 2019 Conservative Party manifesto is to be made available and that he will invest an additional £500m in insulation measures by 2024.

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This roll-out could be done quickly and easily through existing schemes such as ECO and Sustainable Warmth with an initial focus on loft and cavity wall insulation and funding. But we need to reform the way money is allocated so that councils do not have to put in multiple, time-consuming competitive bids.

Instead, funds should be appropriated to the areas that need them most, and councils who know their communities best should be given discretion over how to spend the money. This vital work should be paid for via a windfall tax that re-directs excess oil and gas profits into funding for scaling up domestic energy efficiency measures, rather than burdening the taxpayer for many years to come.

This type of investment makes sound economic sense, and analysis this week by Cambridge Econometrics outlined how insulating homes and installing heat pumps could benefit the UK economy to the tune of £7bn each year and create 140,000 new jobs by 2030. This builds on previous analysis by the Energy and Climate Intelligence Unit that demonstrated how investment in retrofit could be cost-neutral for the Treasury by the end of the current parliamentary term.

This analysis should assure the government that such low-cost, low-carbon solutions are the rational and pragmatic answer to both the energy crisis and the climate emergency.

Beyond improving the energy efficiency of homes of those in greatest poverty, the government must also now, finally, put in place policies that encourage retrofit by those on average incomes. To stimulate demand, Ashden suggests the government should:

  • Introduce further incentives and finance for retrofit, including a fiscally neutral variable stamp duty land tax for more efficient homes.
  • Create a revolving loan fund and/or low-cost finance for home energy retrofitting working with retail banks and the UK Infrastructure Bank.
  • Subsidise whole-house plans for homeowners.
  • Run a nationwide home retrofit awareness campaign with the resources for promotion by local government.
  • Provide funding for local authorities to offer retrofit advice services and directories of local installers.

To ensure that the UK has the skilled practitioners needed to roll out this work, the government also needs to:

  • Publish a national skills plan for retrofit, including a campaign to recruit new trainees and upskill existing builders and heating engineers. 
  • Integrate skills development into government-funded retrofit schemes in order to allow sufficient delivery time to secure training objectives for officers employed by councils and housing providers as well as craft-trades, project managers, retrofit assessors and coordinators. Each grant should include a dedicated budget for training.
  • Reform apprenticeships so that those in the construction sector cover retrofit skills and not just new builds, as well as being more flexible so that SMEs can access them.
  • Restore the adult education budget to 2010 levels to support re-training for retrofit roles.
  • Support the college sector to upskill existing instructors, build training rigs and set up a national retrofit centre of expertise, working in partnership with construction sector employers.

Truss and Kwarteng have two years to fix this crisis. Tomorrow’s fiscal statement will be an important first test. But will they rise to the occasion, kick-start a green revolution where the national grid becomes flooded with renewables that provide cheap clean energy to millions of newly insulated homes, or will this be seen as a missed opportunity, leaving the UK unsecure and ill-prepared for a seemingly never-ending energy crisis?

Ashden is part of the Warm this Winter coalition which demands that the government provides more emergency financial support for people this winter, funding to help people cut their bills with better insulation, and rapidly moves the country away from expensive gas and onto cheaper, renewable energy.