Government delivers on energy efficiency pledge with £3bn funding package

The government has responded to significant pressure from the CBI to prioritise energy efficiency in its efforts to help revive the economy.

In advance of his Summer Economic Statement, the Chancellor has unveiled a £3bn package of funding to help improve energy efficiency in people’s homes and public buildings, including schools and hospitals.

The CBI in action

The CBI has been championing the importance of energy efficiency for several years, with calls for energy efficiency to be designated as a national infrastructure priority, and policy recommendations featuring prominently in our 2019 report The low-carbon 2020s – a decade of delivery.

As attention has rightly turned to how best to re-boot the economy, we have pushed hard for this vital infrastructure to be at the heart of measures needed to create sustainable jobs for the future. In the CBI’s letter to the Prime Minister on priorities for the recovery we called for urgent efforts to “make every home a green home”, and in recommendations to the Chancellor we outlined how home-upgrades could help kick-start the housing sector following the lockdown.

In our detailed paper on principles and priorities for a green recovery, published in June, we again highlighted the importance of investing in energy efficiency to help create jobs across the country, while delivering much needed infrastructure that will help reduce energy bills, prepare the ground for low-carbon heat, and help us on the journey to net-zero emissions. We specifically called on the government to come good with its manifesto pledge to spend £9.2bn during this Parliament on energy efficiency, with funding targeted at upgrading private homes, social housing projects, and public sector buildings. We noted the high proportion of SMEs in the sector that were vulnerable to the ongoing impacts of the lockdown, and the “shovel-ready” nature of energy efficiency measures that can be delivered at pace.

The government has responded with a commitment to spend £1bn on retrofitting public sector buildings, £50m to pilot new energy efficiency projects in social housing, and £2bn backing for ‘Green Home Grants’ that will help home-owners install much needed but expensive energy efficiency measures. Households will be eligible for vouchers valued at up to £5,000 for energy efficiency upgrades, such as wall and loft insulation, covering at least two-thirds of installation costs. Those in low-income households, who could benefit the most from lower energy bills, will be eligible for vouchers up to £10,000.

Moving forward

Together these measures are an important first step towards realising that manifesto pledge, and come at a crucial moment for delivering new, green jobs at a critical time for the economy. HM Treasury has recognised the opportunity to support over 100,000 jobs as part of a national energy efficiency programme, which could deliver economic benefits throughout the decade.

More details will be announced at the Economic Statement on 8 July, and the grants will be available from September.

The CBI will continue to work with members on the delivery of these schemes, and shaping ideas for what will follow as we work with government on their plans to deliver net-zero emissions across the economy.