Taxpayers will pay up to £9 billion a year extra under the Energy Price Guarantee scheme because of government’s 2013 decision to cut support for home insulation, according to new analysis by the Energy and Climate Intelligence Unit.
The savings would have been delivered by upgrades to 10 million homes.

In 2012, the UK installed 2.3 million items of home insulation, but ECIU says a decision by the then-government to ‘cut the green crap’ sent rates plummeting by 90%. If loft and cavity wall insulation – typical energy efficiency improvements – had continued, one million homes could have been upgraded each year. That would mean almost 40% of the UK’s housing stock would be using 15-20% less gas. The total gas demand from the overall housing stock would have been almost 10% lower than today and the average household gas bill would be £350–400 lower from this October when the price freeze kicks in, says ECIU.
With almost 24 million homes using gas, this could have saved Treasury and taxpayers around £9 billion in the first year of the Energy Price Guarantee and, if gas prices stay high as some experts have predicted, £18 billion over the scheme’s current two-year duration.

Commenting on the findings, Dr Simon Cran-McGreehin, Head of Analysis at the Energy and Climate Intelligence Unit (ECIU) said: “Cutting the green levies on bills during the last cost-of-living crisis has come back to bite the Treasury in the coffers. If it had instead shifted insulation programmes on to the Government balance sheet it would not only have made its money back, but saved the taxpayer up to £8 billion as well as trimming hundreds of pounds off the energy bills of millions of homes.

“Taxpayers and billpayers alike will now be wondering why insulation has not really featured in government plans to tackle the gas crisis, particularly when cold homes cost the NHS £3 billion a year.”