A report from the Institute for Government has warned that the UK risks a worse energy crisis in 2023, after a decade of ineffective housing and energy policy
A report from the Institute for Government has warned that the UK is at particular risk of being hit hardest by a worsening energy crisis in 2023 after a decade has been lost on making energy-efficient housing policy decisions.
As she takes office, new Prime minister Liz Truss has presented a set of plans to combat the rising energy prices and mitigate the cost-of-living crisis.
But the “Tackling the UK’s energy efficiency problem” report has found several flaws with the proposed strategies and points out that the quality of UK housing is far behind our European peers.
Short-term solutions that are unlikely to have long-term impact
The government will freeze household energy bills at £2,500 for two years from October, and offer equivalent support to businesses for six months. This is well below the more than £3,500 bills were set to reach in October and more than £5,000 they were forecast to reach in January.
The government has so far provided no costings, but reports suggest this could cost around £150 billion and will be paid for through borrowing.
The Truss administration is also set to lift bans on fracking and announcing new licences for North Sea oil and gas to build the UK’s energy independence.
However, these schemes will take time to realise and fracking is likely to face continued legal and public opposition, further stalling its implementation.
The influence these measures will have on international markets is expected to be minimal, and will have little impact on the UK’s uniquely high need on external oil and gas supplies.
Prices are expected to rise across the board, rendering current measures ineffective against a worse energy crisis in 2023
Forecasts show energy prices continuing to increase between October and January, rising again in April 2023, and then remaining as much as four times higher than historic rates into 2025. Indices such as the August Construction PMI and ONS figures are already predicting a pessimistic outlook for the rest of the year.
The latest UK Housing Review found that there were nine million people on lower incomes living in energy-inefficient homes in England- and it is these people who will be hit hardest by an energy crisis in 2023.
A lack of cohesive long-term strategy means the UK is far behind European counterparts in retrofitting and alternative energy solutions
The primary driver of the UK’s gas dependence is heating homes. More than four fifths of UK homes are currently still heated by gas boilers, a much higher proportion than in most countries.
The UK’s housing stock is also the oldest and least energy efficient in Europe- over 52% of homes in England were built before 1965 and nearly 20% were built before 1919.
One recent study by Tado of 80,000 of its users suggested that a UK home with an indoor temperature of 20C and an outside temperature of 0C lost on average 3C after five hours, up to three times as much as homes in some other European countries like Germany.
Most houses are also poorly insulated, allowing further inefficient heat loss. The report noted that rates of loft and cavity wall insulation installation have collapsed in the last ten years after “a string of bad policy decisions”.
France and Germany have seen success with long-term measures
Countries like Germany and France have seen effective change in raising the energy efficiency of housing stock with long term approaches.
Germany offers a combination of grants that cover up to 50% of energy efficiency improvement costs and France will ban the sale of lowest performing homes from 2025, with progressive tightening of requirements up to 2050.
It remains to be seen if the Truss administration will take more declarative action as public discontent grows. Many members of the public will not have the luxury of choice.
Harriet Clough
