Experts have said planned cuts to insulation and heat pumps for low-income households will leave homes damp, dry and unsafe in winter.
Housing has sought a one-year extension in the scheme to ensure continuity and save small retrofit companies from going bankrupt. Companies say funding is already being withdrawn for solar panels and insulation that will leave homes cold and dry as winter sets in.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 scrapping the £1.3 billion Energy Company Obligation (ECO) scheme, which helped fund upgrades for homes owned or rented by households earning less than £31,000.
The scheme is scheduled to end in March. The government is planning to launch a “Warm Home Scheme” to provide funding for heat pumps, insulation and other home upgrades, but this is being delayed.
Experts have said this would affect an estimated 222,000 future retrofit projects, which would cut bills for low-income families.
Although the scheme was controversial – some external wall insulation fittings were defective and had to be replaced – it has provided retrofits to more than 15 million homes since 2013, saving £110 billion on energy bills. An estimated 23,000 of these had problems with external wall insulation.
The uncertainty and gaps in plans, experts warn, could lead to job cuts and some businesses being forced to close. Climate change think tank E3G estimates the cuts would lead to the loss of 10,000 skilled jobs, including many apprentices, about the same number employed at Jaguar Land Rover’s Solihull plant.
Anna Moore, former head of UK construction at McKinsey and now founder of Domna, a retrofit company that works with housing associations, social landlords and councils, has written to the Energy Secretary, Ed Miliband, requesting ringfencing of funding for low-income households and a one-year extension to the warm homes scheme.
He said: “Suddenly spending £1.3 billion of money is chaotic, and has created a huge challenge for thousands of low-income families facing fuel shortages, as well as small and medium enterprises employing around 10,000 people.
“With fuel poverty rising and businesses under pressure, it beggars belief that a successful scheme providing utility firm funding to society’s poorest households should be ruthlessly cut. And for what? To create some short-term headlines around a cut to the net zero levy.
“This fundamentally goes against Labour’s stated values of helping the poor and fighting climate change. This is not the time to pull up the ladder. Incorporating ECOs into warm homes planning is essential if we are to protect residents, protect jobs and protect progress.”
Small companies have sought clarity and detail in the scheme to protect their businesses. Joel Pearson, director of Net Zero Renewables, a solar panel installer, said: “We employ and subcontract over 35 skilled individuals, and have helped lift over 200 households out of fuel poverty through the ECO scheme.
“I would urge Rachel Reeves to think again and at least extend this current scheme by a year so we can see an orderly change and support companies like ours helping to mitigate climate change.”
Lee Rix, managing director of Preston-based installer, Eco Approach, said: “Each year more than 150 of our 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 in place, ending ECO4 risks abandoning those families and undermining the workforce that supports them – we urgently need clarity on succession planning.”
Moore said: “Funders are pulling back on anything new that hasn’t already been allocated (we had several calls to this effect today from installers saying their funding has been cut – literally about 1,500 homes have been put on hold due to insulation or solar – receiving pre-Christmas support). The immediate effect is putting the brakes on programs right in the middle of the cold snap.”
There are also fears that removing the scheme without a scheme to heat homes would lead to more people living in fuel poverty for longer periods of time, as insulation and solar could reduce energy bills.
A spokesperson for the Department for Energy Security and Net Zero said: “ECO and the Great British Insulation schemes were not delivering value for money. We are instead investing an extra £1.5 billion in our warmer homes scheme, taking it to almost £15 billion – the largest public investment ever to upgrade homes and tackle fuel poverty.”
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