But delayed introduction of ECO4 and Warm Homes Discount at a time when energy prices are soaring prompts fierce criticism
The government has today confirmed plans to extend both the Warm Homes Discount and ECO energy efficiency schemes through to 2026 backed by hundreds of millions of pounds of additional funding, although neither scheme is expected to lead to increased support for households facing soaring energy bills until later this year.
In consultation responses published today, the government said it would be going ahead with a previously announced uplift for the fourth iteration of the Energy Company Obligation (ECO) scheme, which will benefit in a rise in spending from around £600m to £1bn a year.
The ECO scheme is one of the government’s flagship energy efficiency policies, having helped support green insulation upgrades to 2.4 million homes since it was first introduced in 2013 and resulting in reduced greenhouse gas emissions and energy bills.
The government said it planned to legislate for ECO4 “when Parliamentary time allows” later this year, but estimated the move would help deliver green upgrades for around 450,000 homes while supporting around 18,000 jobs across Britain over the next four years.
The upgrade programme will also help to reduce household bills by around £290 on average, potentially rising to around £1,600 for the least efficiency homes, according to the Department for Business, Energy and Industrial Strategy (BEIS).
Lord Callanan, Minister for Business Energy and Corporate Responsibility, said the government remained committed to ECO, but that “some reforms of the scheme are necessary” in order to help deliver on UK fuel poverty and climate targets over the coming decade.
“We will sharpen our focus on low income and vulnerable households living in the least efficient homes,” he said. “And we will ensure that those households receive more comprehensive upgrades to their properties, leading to more transformational outcomes.”
Only low income homes with Energy Performance Certificate (EPC) ratings of D to G will be eligible for ECO4, while social housing and private rented properties will only be eligible if they have an E to G rating. The scheme has a target for delivering 90,000 solid wall measures over the next four years, with 10 per cent of the delivery from ECO3 eligible to be carried over into ECO4.
“The changes we are making are consistent with the Heat and Buildings Strategy and transition to net zero,” said Callanan. “We will have a greater focus on improving the fabric of the building and ensuring that homes are suitable for renewable heating. However, we will also maintain some limited support for the repair and replacement of existing boilers, recognising that some households will have an immediate need for warmth and a low carbon heating option may not be suitable.”
Similarly, the government confirmed today plans to extend the Warm Homes Discount through to 2026, in addition to increasing the rebate it offers on energy bills for vulnerable households from £140 to £150, which amounts to an overall increase in spending through the policy from £350m to £475m.
The government estimated an additional 750,000 households would benefit from the expanded scheme, which comes amid soaring energy prices driven by the volatile global market for fossil fuel gas, which has been further exacerbated by Russia’s invasion of Ukraine.
The moves also comes alongside the introduction of the new Boiler Upgrade Scheme, which from today offers householders money off the cost of installing low carbon heating systems, including up to £5,000 off air source heat pumps and biomass boilers, and up to £6,000 off ground source heat pump installations.
However, with the Energy Price Cap rise of 54 per cent coming into force on the same day, adding £700 to the average household bill in the UK this year, concerns have been raised over policy delays which mean neither ECO4 nor the Warm Homes Discount are set to be operational until summer at the earliest.
Matt Copeland, head of policy and public affairs at the charity National Energy Action (NEA), welcomed the decision to extend both schemes as well as the uptick in funding. But he warned that the failure to implement ECO today could lead to slower rate of insulation installations for vulnerable households over the coming months, just as energy bills are set for a major hike.
He said the last time there was a delay in the ECO3 scheme “we saw that lowest energy efficiency install rates in a decade”.
“If that happens now, the timing would be unacceptably bad,” Copeland added.
Today, energy prices increase significantly, plunging millions into making unimaginable choices about which essentials to ration.
Now, @beisgovuk have released the details of the two biggest schemes to help fuel poor households. How do they stack up against the problem?
— Matt Copeland (@Matt_Copeland1) April 1, 2022
Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit (ECIU), warned that if the government “doesn’t get on with delivering and ramping up these schemes further, making insulation a key plank of its Energy Security Strategy, voters may well be wondering why not when bills stay high”.
“Reducing our gas demand during an international gas crisis is a complete no brainer,” she said. “And by all accounts ECO has been an incredibly successful energy efficiency scheme that’s reduced demand, without which millions of struggling homes would be facing gas bills hundreds of pounds higher. This makes the delay all the more frustrating. This isn’t exactly rocket science.”
Campaigners have long argued that the ECO scheme should be backed by increased funding, arguing that previous cuts to the scheme have resulted in higher energy bills and carbon emissions. Energy firms have also called on the government to shift the cost of the scheme off energy bill levies and into general taxation, arguing the approach would be more progressive and would allow them to curb today’s increase in bills. However, the Treasury has to date resisted such calls amid concerns over how to fund the proposed moves.
