Five things we hope to see in the Spring Statement
Chancellor Rishi Sunak has a huge task ahead of him for 2022’s Spring Statement. It comes at a critical time with volatility in world markets, a cost-of-living crisis and wage pressures.
The Chancellor must act now, not delay till autumn, to support the most vulnerable households and ensure the UK economy remains one that encourages investment and innovation.
The events in Ukraine have compounded all of this, and strengthened the imperative to build a reliable, homegrown energy sector that is powered by renewables.
We need to do everything we can to support vulnerable customers in the short-term, whilst investing in a cleaner, greener energy system which will bring bills down for everyone in the longer-term.
Here are our top five recommendations.
1. Increased targeted financial support
Expanded targeted emergency financial support for the most vulnerable households this winter, which can be achieved with the costs of borrowing still low. Provide a centrally funded increase to the Warm Home Discount (WHD) to a minimum of £300.
2. Comprehensive energy efficiency scheme
Announce a comprehensive, centrally funded government energy efficiency scheme. Additional funding can be pushed through existing schemes before this winter, whilst also utilising the newly created UK Infrastructure Bank to help accelerate the retrofit revolution needed for our homes and businesses.
3. Interest free finance and removal of VAT on clean tech
Work quickly with banks and lenders to create the availability of interest free-finance options for homeowners to install clean tech products which includes low carbon heat, self-generation, storage, EV charging & home retrofit measures. Treasury should also remove VAT on clean technology and bring forward the business rates exemption for on-site renewable energy to this year, instead of 2023.
4. Review policy costs on energy bills
Commit to a review of policy costs on energy bills, which currently sit disproportionally on electricity bills vs gas bills (12% vs 3%). Moving policy costs into general taxation would be a progressive move and directly reduce bills. This also has the added benefit of incentivising heat decarbonisation, essential as we move to reduce our reliance on gas.
5. Pump up the electric heat transition
Raise the ambition for heat pump installation targets to 900,000 installs by 2028. To achieve this, government should bring forward an extensive skills training program for heating engineers in the UK, whilst also placing obligations on boiler manufacturers to produce more heat pumps.
With policies such as these, the Spring Statement can set out a vision to inspire the next wave of the transition, and indeed turn the government’s ambition into positive, transformational change.
The transition away from fossil fuels is not just an economic and environmental imperative, it is now a national security necessity. We need government support to match the ambition of industry in delivering this objective.
