The Association for Renewable Energy and Clean Technology (REA) has urged the government to take action on energy bills after inflation rose by 5.4%, a near three-decade high.
Last week, the REA published a six point plan to help tackle the crisis, with the Joseph Rowntree Foundation warning 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.
The 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.
Dr Nina Skorupska CBE, chief executive of the Association for Renewable Energy and Clean Technology (REA), said: “The fact that inflation has reached its highest level in nearly three decades underlines why the Government needs to urgently tackle the energy bills crisis. An increasing number of households are facing a devastating choice between heating and eating, which is why VAT on energy bills must be suspended, and why the Warm Homes Discount must be expanded, both in terms of value and eligibility. We also believe that, while the investment the ‘green’ levies provide has been crucial for driving the energy transition forward, it would be more appropriately sourced from general taxation, at least at the same level.
“However, while these are important short-term measures, there also needs to be a significant drive to insulate our homes and increase the installation of domestic renewables and clean technology to protect households from volatile gas prices. It is clear that there needs to be a combination of measures to immediately relieve pressure on the cost of living, while working rapidly to insulate people against the financial burden of fossil fuels in the longer term. If the Government fails to act now, the consequences for millions of people in this country will be stark.”
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.