AgilityEco responds to the Chancellor’s Autumn Statement
18 November 2022
On Thursday morning the Chancellor made his Autumn Statement – the third big financial announcement from the government in the last few weeks. Matters related to energy formed a significant part of the statement and we were delighted that energy efficiency was recognised as being key to lowering bills, reducing carbon emissions and ensuring energy security for the country. We were also pleased to see various protections put in place to support low income and vulnerable households this winter, though we recognise that for many it will not be enough to ensure they stay warm and well.
We would like to highlight a few of the key points:
There will be a new national energy efficiency ambition: there will be a new target to achieve a 15% reduction in energy consumption from buildings and industry by 2030. This would equate to a £28bn per year saving in today’s prices, or the equivalent of £450 per household. This will clearly complement the existing statutory targets of eliminating fuel poverty by 2030 and achieving net zero by 2050.
Additional funding for energy efficiency from 2025: The Chancellor referenced the current spend of £6.6bn during the current parliament (2019-2024). From 2025 there will be a further £6bn, which he said will be “doubling our annual investment” – it’s not clear what form this extra funding will take and whether it will be delivered in a similar way as now (e.g. an ECO5 or a HUG3). He promised that the BEIS department will provide further updates shortly – including on an ‘energy efficiency taskforce’. With winter fast approaching we hope that BEIS will not delay in clarifying their plans.
A national energy saving campaign: to date the government has shied away from this but we would welcome national support in encouraging homes to reduce their energy use at peak times, and giving them clear advice on how they can get further support to lower their bills and stay warm.
The Energy Price Guarantee: the effective cap on energy tariff rates will mean the average energy bill will rise to £3,000 a year from April 2023, up from the current level of £2,500 a year. This will offer some protection from high gas prices but it’s important that customers know it is a cap on rates not overall bills. People living in energy inefficient homes, those with large families and those needing to use more energy for medical reasons may all pay more than £3,000, and very high users of energy may also have their state support capped.
Help for off gas homes and the Household Support Fund: off-gas homes will see their one-off payments of £100 this winter to help cover the increased costs of heating oil and LPG increased to £200. And councils will get £1bn in 2023/24 for the Household Support Fund, which allows them to offer direct financial help to those most vulnerable in their areas.
Further Consumer Protection: There will be extra ‘cost of living’ payments in 2023/24 of £900 for those on means-tested benefits, £300 for pensioners and £150 for individuals on disability benefit. From 2024/25 onwards the government is planning a wider reform of consumer protection in energy markets – for example, social tariffs could be introduced in the way that they have for water customers. There will be a consultation in due course. Needless to say we feel that targeted support for the most vulnerable households is absolutely vital.
Green Levies: these infamous additions to bills that cover environmental and social obligations (including ECO and the Warm Home Discount) will continue to be temporarily funded by the Treasury during 2023/24, as part of the overall Energy Price Guarantee. What happens after that is still to be decided – AgilityEco has campaigned hard to reduce the confusion around what the ‘green levies’ fund and the importance of social obligations in helping to tackle fuel poverty.
The full Autumn Statement is available here and for a summary of the energy-related announcements you should skip to P47-48.
As you’ll expect we are eagerly awaiting the more new about the energy saving campaign and the ‘task force’ and we’ll provide a further update when we know more.
