Prioritise insulation, not oil tax breaks, UK government told

As Britons face soaring heating bills and the worst cost of living crisis in a generation, and environmental experts warn against fossil fuel projects, Rishi Sunak is told billions are being spent on the wrong energy subsidies.

The money being used to offer oil and gas companies a 91% tax break would be better spent on domestic insulation, which would have permanently cut energy bills for around 2m homes. 

That’s the results of a study by the thinktank E3G, which also suggests revenue from the windfall tax – which targets the huge additional profits oil firms have enjoyed – could be better allocated. 

Based on current estimations, the tax break will grant the industry between £2.5bn and £5.7bn over the next three years, which will be used for new oil and gas exploration and development. In comparison, an energy efficiency programme capped at £3bn could cover upgrade costs for 2.1m UK homes, in turn making them less reliant on gas and more resilient to energy prices. A further bill hike has already been announced for autumn, at which point consumers will pay up to 100% more than they did compared with the same time last year, pushing 1/3 of households into fuel poverty. 

Proposals for a windfall tax on the unexpected profits reported by giants like BP and Shell were initially rejected by government due to fears it would put energy giants off investment, but were confirmed as policy last week in a sudden u-turn. Part of the revenue generated through this will part-fund giving every household £400 off their annual energy bill. A one-time offer, according to a report in the Guardian, the Tony Blair Institute for Global Change believes investment in efficiency improvements totalling £4bn would permanently halve residential heating bills by 2035. 

Earlier this month data was released showing that currently only half of  UK homes meet insulation standards set in the 1970s.