Britain needs to learn from its neighbours in tackling soaring energy bills, not least in remedying its long-neglected insulation for homes and factories, a think tank has warned.

The Institute for Government says in a new paper that, while prime minister Truss’s uncosted plan to peg the domestic price cap at £2,500 for two years is simple to understand and matches the scale of the UK’s energy crisis, it misses the key problem of curbing consumption.

And the PM’s focus on supply over energy demand does little to tackle the crisis in the longer term, leaving homes facing eyewatering bills into 2024 and beyond.

Analysts Rosa Hodgkin and Tom Sasse calculate that a major programme to reduce energy use, including by boosting insulation, could reduce aggregate household energy costs by £27bn as early as 2023.

In immediate measures to reduce energy waste, Truss’ government should as a minimum roll out a mass campaign to change boiler flow temperatures, the pair urge.   In their words, that’s “a simple and cost-free step that can reduce gas use by as much as 10%, but which ministers have so far proved unwilling to publicly support, apparently for fear of appearing nannying”.

“The UK’s current approach lacks ambition and funding – and it has ignored demand during the current crisis”, the IfG’s assessors judge.

More strategically, they allege, the 2021 Heat and Buildings Strategy “fell short of …presenting a convincing plan for home retrofit. …It was too short-term and included major gaps including on owner-occupied homes”, in the IfG’s view.

“There is a strong case for further investment, with over £ 3 billion promised in the 2019 Conservative manifesto, and yet to be spent”, the analysts argue.

“Upgrades could now pay back as much as four times more quickly compared to last year, given the level of gas prices”.

Decade of failure

“The UK is paying the price for a decade of failure”, the IfG pair allege.

“(Our) old housing stock meant it faced a steeper challenge than other countries, but it scaled back subsidies in the 2010s and the last two major policy interventions – the 2012 Green Deal and the 2020 Green Homes Grant – were poorly designed, failed to boost uptake, and harmed trust among consumers and installers”.

Britain also ditched plans to tighten regulations on new-build homes in 2015.  Energy Performance Certificates introduced after 2005 have improved insulation in British homes, but not enough, say the IfG researchers.

In England alone, the latest UK Housing Review found nine million poorer people are living in energy-inefficient homes.  They are inhabited mainly by people on lower incomes, with private rented or owner-occupied homes proportionately worst.

Insulation measures can make a major difference to bills. Homes with an EPC rating of F are likely to have a gas bill almost £1,000 higher than a home rated C this winter, say Hodgkin and Sass, citing the Energy and Climate Intelligence Unit.

BEIS estimated in 2021 that the reduction in gas consumption from energy efficiency measures ranged from 4% from loft insulation to 18% from solid wall insulation.

But installations have collapsed, with 2 million insulation projects begun in 2010 plumetting in 2021 to less than 30,000.

Reversing Britain’s dire state of home energy efficiency will take a combination of grants, loans, tax breaks, new duties on energy retailers, and more enforcement of tougher building standards, says the report.

Germany, France and Italy provide powerful models for improvement, in the analysts’ assessment.

Germany’s grants of up to half the cost of cavity-wall insulation, backed by low-interest loans for the remainder, doubled take up over one year to 2020, to 600,000 homes.

France is targeting better insulation for its poorest citizens, through targeted grants. It is stopping developers selling their least insulated homes after 2025, and plans further raises in building regulations.

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