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Jan 25, 2022

Built Environment, Decarbonising Heat, Decarbonising Power, energy transition, government, Government policy, heat, net zero, policy

  • Government urged to take action on energy bills after borrowing revealed to be lower than expected;
  • REA says the figures give the Chancellor scope to introduce measures to ease the cost of living crisis;
  • Two weeks ago, the REA published a six-point plan to tackle the energy bill crisis, with proposals to reduce costs and increase support to those that need it;
  • Need to insulate homes and install domestic renewables and clean tech highlighted, and a Commercial Loan Scheme is backed to support energy suppliers and protect customers from additional costs;
  • REA says the wider energy transition to remove volatile gas prices from bills also needs to accelerate.

The Association for Renewable Energy and Clean Technology (REA) says better than expected borrowing figures gives the Government scope to act on energy bills and ease the cost of living crisis.

The Office for National Statistics (ONS) said the Government borrowed £16.8bn to balance its books last month, nearly £2bn lower than expected.

The REA has published a six point plan to help tackle the crisis, with the Joseph Rowntree Foundation warning last week that rising energy bills ‘have the potential to devastate the budgets of families on the lowest incomes.’ The Resolution Foundation says that the number of families suffering from ‘fuel stress’ is set to treble overnight to six million.

Dr Nina Skorupska CBE, Chief Executive of the Association for Renewable Energy and Clean Technology (REA), said:

“Today’s financial figures give the Chancellor greater fiscal room to implement the measures necessary to deal with the cost of living crisis.

“Soaring energy bills are set to push six million families into real difficulty when the energy price cap increase takes effect in April, which is why it’s critical that the Government introduces targeted measures. This would ease the burden of household bills on families in the short term, while also reducing the UK’s exposure to volatile, global fossil fuel markets over the coming months.

“Not only that, but without intervention from the Government, energy providers will be forced to pass on penalising gas prices onto consumers or could even go out of business. That scenario could slow the energy transition with damaging consequences.

“The Chancellor can and must act now – if he doesn’t, I am extremely concerned about the ramifications for millions of people.”

The REA’s plan includes measures to reduce energy bill costs by moving ‘green’ levies into general taxation and to suspend VAT on energy bills for a year. The REA says that the investment the levies provide has been crucial for driving the energy transition forward and must be protected, but that this would be more appropriate to be sourced from general taxation.

The REA has also urged the Government to expand the eligibility and increase the value of the Warm Homes Discount to provide additional support for those who need it.

In parallel, the REA says the Government must provide catalysts to improve the insulation of homes and to drive up the installation of domestic renewables and clean technology to reduce the threat of volatile gas prices. This can be done by establishing an effective insulation scheme by Spring 2022 to ensure all houses be EPC rating C at least by 2024/25, and to remove VAT on domestic renewables and clean technology.

Finally, the REA has backed Octopus Energy’s calls to introduce a short-term Commercial Loan Scheme to support energy suppliers manage elevated wholesale gas prices and protect their customers from additional costs.

The REA has also iterated the need to accelerate the wider energy transition to remove volatile gas prices from bills, for example by increasing the frequency of CfD auctions to remove our reliance on imported fuels.

The REA’s six point plan is as follows:

  1. Move ‘green’ levies into general taxation – this must be ring fenced at an equivalent value;
  2. Suspend VAT on energy bills for a year – mitigating against rising energy bills;
  3. Expand eligibility and increase value of Warm Homes Discount – ensuring additional support for those who need it;
  4. Remove VAT on all domestic renewable and clean technology – help households move away from fossil fuels;
  5. Establish an effective home insulation scheme by Spring 2022 – ensure all houses to be EPC rating C at a minimum, where technically feasible, by 2024/25;
  6. Introduce Commercial Loan Scheme – support energy suppliers in managing elevated wholesale gas prices and protect customers from additional costs.

—ENDS—

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Notes to editors

About the Association for Renewable Energy and Clean Technology (REA): The Association for Renewable Energy and Clean Technology (known as the REA) is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, power and the circular economy. The REA is a not-for-profit organisation representing fourteen sectors, ranging from biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders. For more information, visit: www.r-e-a.net