An analysis reveals that only about £4.5 billion of the £6.6 billion allocated for making buildings more energy efficient has been spent.

Despite the ongoing energy bill and cost of living crises, analysis indicates that a third of the funding pledged by the British government for insulation and heat pump installation still needs to be spent.

Approximately £2.1 billion of the £6.6 billion intended to be spent between 2020 and 2025  to make buildings more energy efficient and decarbonising heat remains unspent. 

The funding is part of the £9.2 billion pledged for such expenditures in the 2019 Conservative general election manifesto.

Insulating homes or switching from gas to heat pumps could save households money and alleviate the cost of living crisis, but with government assistance, most people can afford the upfront costs of such measures.

According to Juliet Phillips, the senior policy adviser at the E3G think tank, the government’s failure to spend the allocated funds indicates inadequate domestic insulation and decarbonisation policies. The green homes grant was announced with great fanfare three years ago, but a parliamentary committee deemed the programme a failure within six months of its launch.  This followed a decade or more of similarly failed endeavours. 

This has discouraged the housing industry from investing in the training of individuals to insulate homes and install heat pumps.

Phillips stated, “Decades of boom-and-bust policymaking have decimated the industry.” Long-term certainty is required to restore the confidence to plan and invest in skills.

Although ministers have allocated funds to help decarbonise public buildings and provide energy efficiency upgrades in social housing and for some individuals with low incomes, there currently needs to be a nationwide programme for households with a middle income.

A committee of the House of Lords stated last week that the government’s boiler upgrade programme needed to deliver. 

The scheme, which offers households in England and Wales up to £6,000 to replace existing boilers with heat pumps or other low-carbon alternatives, was expected to cost £450m, but only a third of its annual budget has been spent. The climate minister, Graham Stuart, has previously stated that the underspending on the boiler upgrade programme would not be repurposed for heat pump spending but instead returned to the general Treasury.

Heat pump adoption in the UK has lagged behind that of many other European nations, whose adoption has been spurred by high gas prices and supply issues stemming from Russia’s invasion of Ukraine.

E3G estimates that the current parliament will need to spend £8.7bn to put the UK on track to meet its carbon budgets, as set by the Committee on Climate Change under the commitment to reach net zero by 2050.

Phillips stated that it was still possible for the government to spend the necessary funds before the next election.

For instance, the current home improvement grant targets fuel-poor households in rural England but is only available in areas where local governments have won competitions to access funding pots.

Phillips stated that for the UK to meet its climate and energy security goals, the current level of investment in energy efficiency and heat pumps will need to increase significantly. “There is currently a warm homes postcode lottery in the UK, and access to skills, support, and subsidies must be equalised.”

She urged the chancellor, Jeremy Hunt, to introduce new measures in his March 15th budget. “In the global race to impulse investment in clean industries, the UK could gain a competitive edge by bolstering long-term support for this vital sector by implementing the appropriate policies and economic incentives,” she said.

“The upcoming spring budget provides the government with a platform to launch a decade-long programme to support warmer homes, green industries, and good jobs throughout the UK.”

A government spokesperson stated, “Improving the energy efficiency of homes is crucial for combating fuel poverty and reducing emissions, which is why we’ve committed £6.6 billion this parliament and an additional £6 billion through 2028 to make buildings more energy efficient.”

“The Energy Company Obligation programme alone has made improvements to approximately 2.4 million homes, and our £1 billion Great British Insulation Scheme will bolster these efforts later this year by installing energy efficiency measures in households that were previously ineligible for ECO assistance.”

Philip Dunne, the influential chairman of the influential environmental audit committee of the House of Representatives, stated that insulation required significantly more action. He stated, “We require a national mobilisation on energy efficiency to end the intolerable levels of heat loss from homes and buildings.” 

The pledge in the manifesto to spend £9 billion on energy efficiency was laudable, but not all of it has been met.

“Last year’s announcement by the chancellor of £6 billion from 2025 was welcome, but millions of households in fuel poverty cannot afford to wait two more winters. Earlier rather than later, action is required. Our committee has recently proposed that a portion of the windfall tax on the extraordinary profits of oil and gas companies be allocated to energy efficiency improvements.”

If Whitehall sends the proper demand signals, the energy efficiency sector can gain the confidence to grow green jobs and develop robust supply chains for many years.

Ed Miliband, the shadow secretary of state, stated, “Over 13 years, the Conservatives have failed miserably to upgrade British homes, resulting in higher energy bills for the public.”

“From the botched rollout of energy efficiency programmes such as the Green Homes Grant to the snail’s pace of installing low carbon heating, the Conservatives’ failure to implement this agenda has undermined Britain’s energy security and kept energy costs high. With our Warm Homes Plan, Labour would renovate 19 million homes, reducing energy costs and generating good jobs across the UK.”

“Only Labour has an immediate plan to address the cost of living crisis and a long-term plan to permanently reduce bills by transforming Britain into a clean energy superpower.”