Cutting heat loss from houses will be more effective in the long term than subsidising bills, according to analysis
Britain will be plunged into an even worse energy crisis in a year’s time without an immediate plan to improve leaky homes and dramatically reduce demand for gas, ministers have been warned.
The UK ranks among the worst in Europe for the energy efficiency of its homes, according to new research outlining an urgent need to reduce the amount of heat being wasted. Experts are warning that while Liz Truss has bought the government time with her £100bn-plus package to cap energy bills, similarly expensive and unsustainable schemes will be needed unless substantial plans are introduced to improve homes and reduce demand.
Truss’s energy package, a measure likely to define her premiership, is already under pressure for a lack of detail. There is further concern that additional help will need to be targeted at the poorest households, while the relatively short-term assistance handed to businesses will also be raised by business groups in the coming weeks.
While Truss pointed to fracking and the expansion of North Sea fossil fuels as a way of increasing the supply of energy, she has already been warned that this will fail to dent prices – while damaging Britain’s commitment to tackling the climate crisis. Instead, she is being urged to copy successful policies in Germany and elsewhere to improve the energy efficiency of the UK’s houses to reduce demand.
Research from the Institute for Government (IfG) found the UK scored worse than countries right across Europe with a range of climates in terms of the energy efficiency of its homes. Citing analysis of a 2020 study, it found that a UK home with an indoor temperature of 20C and an outside temperature of 0C lost on average 3C after five hours – up to three times as much as homes in European countries such as Germany.
The analysis concludes that UK households and businesses “are likely to still be facing high energy bills in the winter of 2023 – quite possibly beyond that”. It adds: “If the government focuses only on short-term financial support, and long-term measures unlikely to have a major impact, it will find itself in an even more difficult position in a year’s time.”
The UK is particularly vulnerable to spikes in the price of gas. More than four-fifths of UK homes are currently still heated by gas boilers, which is much higher than most countries. The UK’s housing stock is also the oldest and least energy efficient in Europe. More than 52% of homes in England were built before 1965 and nearly 20% were built before 1919.
The IfG analysis warns that energy prices are now expected to rise further and stay higher for longer than had been expected earlier in the crisis, with prices potentially remaining as much as four times higher than historic rates into 2025. It means another huge rescue package could be needed unless Truss acts on reducing demand for gas.
Experts believe a serious energy-efficiency programme could have a real impact within a year. The institute pointed to Germany as a success story, where grants, low-interest loans, tax rebates and free expert advice have all been used, resulting in high take-up figures.