The next prime minister could insulate 500,000 fuel-poor households this winter, ramp up the heat pump grant scheme, and require energy firms to advise customers on how to run gas boilers efficiently to combat the gas crisis, according to a plan proposed today by the Conservative Environment Network (CEN).
The three-point plan comes ahead of the energy price cap announcement, which is expected to see bills rise to exceed £3,000 in October. It includes practical, industry-led solutions that the government could swiftly introduce to ease the gas crisis this winter. These measures should come on top of delivering existing and new direct financial support to vulnerable households.
The proposals would also accelerate progress towards the UK’s net zero goal while tackling the cost of living squeeze. With energy bills set to remain high until 2024 and possibly beyond, the measures will save the Treasury money on future financial support packages. In total, the measures could cost up to £9 billion over the next eight years, significantly less than the £37 billion spent by the government so far to help households through the energy crisis.
Firstly, the government should invest an additional £1 billion a year to expand and extend the Energy Company Obligation (ECO) to insulate 500,000 fuel-poor homes this winter and at least one million a year from April 2023. To unlock investment in the supply chain, ministers should make a longer-term funding commitment to energy efficiency beyond this emergency scheme.
The expanded and extended scheme could deliver 20,000 upgrades a week, permanently lowering bills for hundreds of thousands of homes this winter. Installing loft and cavity wall insulation in draughty homes could lower a semi-detached household’s bills by up to £464 and £519 this winter, respectively. There are seven million homes without these cheap-to-install, high-energy-saving measures, and 19 million energy-inefficient homes in the UK.
Secondly, the government should expand the Boiler Upgrade Scheme to install 775,000 heat pumps by 2025 instead of 90,000. This would reduce household gas usage by 80 per cent and reduce energy bills by up to £225.
Because of the £5,000 grant and VAT cut on energy efficiency products, the Regulatory Assistance Project found that heat pumps reached cost parity with gas boilers for the first time this year. By expanding this scheme, the government can help more people cut their gas usage and bills drastically with heat pumps, while scaling up the sector and driving down the upfront costs of heat pumps over the next few years. The expansion would require an additional £650 million over three years.
Finally, the government should require energy firms to contact their customers, offering advice on how to turn down their piping hot boilers to conserve gas and lower bills. Gas boilers’ “flow temperature” should be set between 55 and 60 degrees depending on the system, but many run at unnecessarily high temperatures, reducing their efficiency and wasting gas. Requiring energy firms to advise on adjusting household boiler settings can cut bills by up to 8 per cent without sacrificing warmth.
CEN MP Philip Dunne commented: "We face an unprecedented energy crisis this winter as Vladimir Putin weaponises gas supplies against Europe. With exceptionally high household energy bills and potential shortages, we need urgent action to help households this winter, including a revitalised programme to insulate homes and reduce our reliance on gas this winter.
"If we act decisively now, we can insulate hundreds of thousands of fuel-poor homes to lower energy bills permanently. Financial support is only a one year fix for this winter. Without a new national programme starting to fix the UK's 19 million energy-inefficient homes, families would be left exposed for longer and the taxpayer landed with a larger bill.
"I urge the next prime minister to consider these practical, industry-led proposals to combat the gas crisis this winter. By insulating our homes and installing heat pumps, we can reduce our reliance on gas, tackle fuel poverty and loosen Putin's grip on our country's economy."
CEN MP Derek Thomas commented: "While we import little gas and oil from Russia, the UK is exposed to Vladimir Putin's weaponisation of gas supplies as we are part of the European fossil fuel market. Energy bills are already rocketing, but if the Kremlin limits gas exports to Europe this winter, we may also see blackouts and energy rationing.
"With nearly 19 million poorly insulated British homes, we are especially vulnerable to the Kremlin's actions. Building new cheap homegrown renewables will strengthen our energy security, but an ambitious industry-led energy efficiency drive can help people this winter.
"On top of financial support, the next prime minister needs to urgently fix the UK's energy efficiency problem that has exposed our country to the energy crisis. These proposals will insulate homes, install heat pumps, and help people run gas boilers more efficiently, saving families hundreds of pounds this winter and lowering their bills permanently."
CEN Director Sam Hall commented: “With energy prices set to remain eye-wateringly high into the middle of this decade, it is imperative the new government strengthens policies immediately to reduce our dependence on gas. Additional financial support for vulnerable households will still be required, but urgent action to cut domestic gas usage could reduce this spending pressure.
“We are part of the European gas market and only capable of producing a fraction of Europe’s gas supply ourselves. Reduced gas consumption is the only reliable way for the UK to cut bills.
“We must learn the lessons from past schemes, however. Ministers need to make multi-year commitments to both insulation and heat pump funding so that businesses have the confidence to invest in their supply chains. Rather than designing complex new schemes, they should put more money into existing programmes that are already working and let the private sector deliver.”