Cuts to a scheme for insulation and heatpumps for low-income households will leave homes damp, draughty and unsafe over winter, experts have said.
Housing have asked for a one-year extension to the scheme to ensure continuity and prevent small retrofit firms going bust. Companies say funding for solar panels and insulation is already being withdrawn, leaving homes cold and draughty as winter sets in.
Rachel Reeves announced in her budget that she would cut £150 a year from the average energy bill, partly financed by axing the £1.3bn energy company obligation (ECO) scheme that helped fund upgrades for homes owned or rented by households earning under £31,000.
This scheme is due to be end in March. The government plans to launch a “warm homes plan” to provide funding for heat pumps, insulation and other home upgrades but this has been beset by delays.
Experts have said this will affect an estimated 222,000 future retrofit projects that would have cut bills for low-income households.
Though the scheme was controversial – with some external wall insulation fittings were faulty and had to be replaced – it has delivered retrofits to more than 15m homes since 2013, saving £110bn on energy bills. An estimated 23,000 of these had problems with the external wall insulation.
Experts warn that uncertainty and the gap between schemes, experts have warned it could trigger job cuts and force some businesses to fold. The climate change thinktank E3G estimates the cut will eliminate 10,000 skilled jobs, including many apprenticeships, roughly the same number employed at Jaguar Land Rover’s Solihull plant.
Anna Moore, McKinsey’s former head of UK construction and now a founder at Domna, a retrofit company working with housing associations, social landlords and councils, has written to the energy secretary, Ed Miliband, to request ringfencing for funding for low-income households in the warm homes plan, and for a year’s extension.
She said: “Suddenly yanking £1.3bn in funding is chaotic, and has created a cliff edge for thousands of low-income households in fuel poverty as well as small and medium enterprises employing some 10,000 people.
“With fuel poverty growing and business under pressure, it beggars belief that a successful scheme funnelling utility firm funding to the poorest households in society should be brutally cut. And for what? To create a few short-term headlines around cutting net zero levies.
“This fundamentally goes against Labour’s stated values of wanting to help the poor and to fight climate change. This is not the moment to pull up the ladder. Bridging ECO to the warm homes plan is essential if we are to protect residents, protect jobs and protect progress.”
Small firms have asked for clarity and an extension to the scheme to protect their businesses. Joel Pearson, director at Net Zero Renewables, a -based solar panel installer, said: “We employ and subcontract over 35 skilled individuals, and have helped take more than 200 homes out of fuel poverty through the ECO scheme.
“I would urge Rachel Reeves to think again and to at least extend this existing scheme by a year so we can see an orderly transition and support firms like ours helping to mitigate climate change.”
Lee Rix, the managing director at Eco Approach, a Preston-based installer, said: “Each year our 150-plus staff and supply chain use ECO4 funding to make cold, inefficient homes safer and more affordable for thousands of families in fuel poverty. With no transition plan, ending ECO4 risks leaving those families abandoned and undermining the workforce that supports them – we urgently need clarity on a successor scheme.”
Moore added: “Funders are pulling back on anything new that hasn’t already been allocated (we had several calls to that effect from installers today, saying their funding has been cut – literally pressing pause on about 1,500 homes receiving insulation or solar pre-Christmas). The immediate impact is slamming the breaks on programmes, right in the middle of a cold snap.”
There are also fears that removing the scheme without the warm homes plan in place will cause more people to live in fuel poverty for longer, as insulation and solar can bring down energy bills.
A spokesperson for the Department for Energy Security and Net Zero said: “The ECO and great British insulation schemes were not delivering value for money. We are instead investing an additional £1.5bn into our warm homes plan, taking it to nearly £15bn – the biggest ever public investment to upgrade homes and tackle fuel poverty.”
