Cutting home insulation funding will imperil UK’s climate goals, Reeves told | Energy efficiency

Rachel Reeves has been told that cutting funding for home insulation from the budget would put Britain’s climate targets at risk and harm low-income households in a joint intervention by energy firms, poverty-stricken charities and environmental groups.

Inside a letter More than 60 groups and companies spoke to the Chancellor, urging Reeves not to resort to such a damaging “short-term fix” to cut funding for more energy-efficient homes to reduce energy bills.

The Guardian revealed this week that Reeves is about to finalize a multi-billion-pound energy support package that is likely to cut green taxes paid for energy efficiency as he seeks to save as much as £170 on the average bill.

The Treasury is working on reducing or eliminating the energy company obligation (ECO), which aims to improve energy efficiency, particularly for low-income and vulnerable households.

Dozens of organisations, from Age UK and Citizens Advice to Friends of the Earth, called on the Treasury in their letter to reconsider cuts to the ECO programme, saying it would “call into question the UK’s ability to meet both fuel poverty and carbon budget targets”. They also warned it puts thousands of jobs at risk in the £20bn energy efficiency industry and supply chain.

“We welcome the news that you plan to take action to reduce households’ energy bills in the upcoming budget, which is crucial to tackling cost-of-living challenges and stimulating the economy,” the letter said.

“But it’s vital this doesn’t come at the expense of investment in energy efficiency measures and low-carbon technologies that permanently reduce household bills. Direct bill support provides an immediate way to help struggling households, while decarbonising homes through cost-effective improvements is the best way to sustainably address poverty and reduce costs for all bill payers.”

His warnings came after Keir Starmer attended the COP30 climate conference in Brazil, where he said the UK was “making real progress” by showing leadership on tackling climate collapse and creating green jobs.

Those who signed the letter include Energy UK, the industry body representing the UK’s main energy companies, National Energy Action, Disability Rights UK, Energy Saving Trust and Greenpeace.

The Prime Minister’s chief secretary, Darren Jones, said in an interview with the Guardian that he wanted to reassure people that the government would not back down on its commitment to green issues and tackling the climate crisis.

Those consulted about the plans say the Chancellor is specifically considering reducing or eliminating ECO, under which energy companies help pay for home improvement measures such as insulation and new heating schemes. Last year the National Audit Office warned: fraud and poor quality Some studies carried out within the scope of the program;

If the scheme is reduced or cut altogether, Energy Secretary Ed Miliband could choose to reallocate money from the £13bn warm homes scheme, the bulk of which is earmarked for subsidies for electric heat pumps. The government decided to keep the scheme as recently as June, but the Chancellor is thought to be keen to have it scaled back to help reduce bills. The government is also considering removing 5% VAT from electricity bills to reduce costs.

James Dyson, a senior researcher at the nonprofit E3G, who helped coordinate the letter, said 10,000 people lost their jobs when the ECO scheme was last cut, leaving millions of families “in draft-free homes paying astronomical energy bills.”

“Cutting ECO could collapse the entire insulation industry, put thousands of working people out of work in parts of the country that need good, skilled jobs, and eliminate one of the best ways to permanently reduce energy bills for low-income families. It would also deprive us of an important tool to reduce carbon emissions in this critical decade for climate action,” he added.

Dhara Vyas, chief executive of Energy UK, also criticized the possibility of changes to home insulation and energy efficiency financing, saying it would be a “short-sighted and disastrous move”.

“We have had numerous previous experiences showing how sudden cuts in investment in warmer homes have led to customers paying billions of pounds more on their energy bills, while also damaging supply chains and businesses, with knock-on effects on investment and job losses.”

Greenpeace UK’s policy director, Dr. Doug Parr said: “Cutting this funding would be the most counterproductive the Chancellor could do in his drive to reduce energy costs.

“Government programs desperately need reforms with tougher regulations to stop the shoddy work of cowboy plumbers, but reducing these regulations will plunge millions of households into fuel poverty with cold, damp homes. These taxes should not be withheld, they should be paid through taxes, so those with the broadest shoulders pay a fairer share.”

Mike Childs, head of science, policy and research at Friends of the Earth, said: “For the government to cut compulsory energy company insulation schemes to reduce energy bills would be a serious betrayal to struggling families. If we are to ease hardship and protect people from harm, we need homes to be made warmer and energy bills to be cut. The Chancellor should not give with one hand and take with the other.”

A HM Treasury spokesman said: “We do not comment on speculation about future changes to tax policy, other than financial matters. The budget at the end of this month will lay stronger foundations for securing Britain’s future and focus on workers’ priorities: shortening waiting lists, reducing the national debt and lowering the cost of living.”

It was also reported last night that Reeves will announce a raid on tax cuts for pension contributions in a move that could raise up to £2bn a year.

There is currently no limit on how much an employee can pay into a pension before paying national insurance, but according to a report in the Times, Reeves is expected to set the limit on how much one’s salary can be sacrificed without paying national insurance at £2,000 a year.

The change means employees will have to pay 8 percent for pension contributions above a certain level, raising concerns that the cost could be passed on to workers.