Tax reliefs in chancellor’s new windfall levy will save energy firms billions
More than two million homes could have been insulated using money set to subsidise oil and gas exploration, according to climate change researchers.
Chancellor Rishi Sunak last week announced that firms which invest in oil and gas extraction in the UK will benefit from tax relief from a new levy on windfall profits. The deduction will correspond to between £2.5bn and £5.7bn in new tax relief for oil and gas producers, according to the think-tank E3G.
It estimates that, over three years, 2.1m homes could be insulated at a cost of £3bn, delivering a claimed £342 in average annual savings on household bills.
The absence of government action on retrofit in the chancellor’s cost-of-living package, and previously in the energy security strategy, has been a source of consternation among some in the built environment sector.
Gillian Charlesworth, chief executive of the Building Research Establishment, welcomed the additional support, but said that “British households also need solutions which protect them in the long term”.
She added: “The UK has one of the oldest and most poorly insulated housing stocks in Europe, and over a third of our gas supply is currently used to heat our homes. This unnecessarily inflates demand for natural gas, leading to higher bills for households.”
She said investment in retrofit would shield households and businesses from future shocks and reduce the need for the taxpayer to intervene in the future.
Cara Jenkinson, cities manager at Ashden, a charity working on retrofit skills, urged the government to use the windfall tax to embark on “a massive nation-wide retrofit campaign”.
She said: “A national retrofit programme will boost local businesses, create new jobs in every corner of the country and support the government’s net-zero and levelling-up targets.
“Supporting retrofitting is the obvious choice – it will quickly turn cold, damp, homes with high fuel bills into warm, insulated, cheaper-to-run homes.”