The industry has warned that if the government decided to eliminate the energy bill levie that pays for home insulation improvements for low-income households, more than 30,000 jobs will be at risk.
Ministers are proposing to end the Energy Company Obligation, a 1bn levy on energy bills which pays for energy efficiency measures for low-income households. After a spike in gas prices, the average household bill will see its energy price cap rise by 700 to 2,000 in April.
The government is reluctant take large steps like windfall tax, which Labour party has called for. Meanwhile, the Treasury has targeted the long-standing ECO as a way to reduce bills. The average bill would save 29 dollars by scrapping it, however, this amount is small.
The Insulation Assurance Authority wrote to ministers urging them not to eliminate ECO. The levy was added to the average energy bill by less than 52p per week, but it had reduced household energy bills by an average of 300 per year for the 3m homes that were treated so far.
Nigel Donohue is the chief executive of the industry group. He said that ECO has been the backbone for those most affected by fuel poverty. To end our dependence on high-cost gas, we need a long-term solution. This means that we must increase energy efficiency investment. It would be utterly selfish to just suspend ECO. It would cause mass redundancies in industry and hurt the most vulnerable. ECO must not be cut.
He warned that any decision to suspend or abandon the measure would be disastrous for job creation. The industry has suffered from a series of government policy reversals in the last decade. In 2010, plans for a nationwide green deal insulation program were first announced. However, they were abruptly cancelled in 2015. The ECO was left as the last insulation program, with the green homes grant launched in 2020. However, it was then abandoned last spring due to maladministration.
Experts claim that this pattern of government intervention has resulted in a severe shortage of investment, training, and skills in insulation. This is problematic because the UK has some of the most leaky homes in Europe.
According to the IAA, previous attempts to cut the ECO in face of high energy costs led to a decrease in insulation jobs by around half.