Think-tank urges government to push for reduction of energy consumption

Failure to do so "would be a reckless use of public money"

Think-tank urges government to push for reduction of energy consumption

The government’s new energy bill guarantee must be accompanied by a significant push to reduce overall energy consumption, think-tank Social Market Foundation (SMF) has said.

SMF stressed that capping energy prices – which would involve the use of public funds to help cover the cost of energy – without a major drive to help people use less energy would risk a “reckless” use of taxpayers’ money.

It further emphasised the need for public information campaigns offering information on reducing energy use and a dramatic increase in home energy efficiency measures such as insulation.

SMF clarified that it supports the price guarantee but noted that the policy means every unit of energy used will impose a cost on the Treasury. With national debt approaching 100% of GDP and annual debt interest payments on course to exceed £100 billion, the SMF said that reducing demand for energy is now “an urgent matter of fiscal responsibility.”

“The central decision to allocate significant sums of public money to lower energy bills is the right one,” the think-tank said. “But it must be accompanied by an equally significant effort to minimise the overall cost of that decision by reducing demand for energy.” 

The SMF noted that 19 million homes in the UK fall below the government’s target of Energy Performance Certificate rating ‘C’ or better, meaning they use more energy than they reasonably need to, largely because they are poorly insulated.

Read more: The push to hit EPC rating ‘C’ – who will pay the price?

That energy efficiency now imposes a direct cost on public finances, the SMF said in a briefing paper.

“As gas-generated heat leaks through our drafty roofs, walls, floors and windows this winter and next, it will take with it billions of pounds in public money,” the paper said. “In the months ahead, insulating homes will not just be good health, climate, and welfare policy, but also a matter of fiscal responsibility.

“For a country where the national debt is around 100% of GDP and annual debt interest payments may soon exceed £100 billion, that fiscal responsibility is of growing importance. Failure to show such responsibility by at least trying to curb demand for taxpayer-funded energy would be a reckless use of public money.”

The SMF said that ministers should take immediate action on demand reduction with a major campaign of public information.

Prime Minister Liz Truss last week said she wanted to leave people to make their own decisions on energy efficiency. However, James Kirkup, director of the Social Market Foundation, said the prime minister’s views on personal choice should not be inconsistent with public information campaigns around energy efficiency.

“The PM’s instinct may well be to leave people alone to make their own choices, but where’s the harm in giving them more information on which to base those choices?” Kirkup pointed out. “Besides, those sacrosanct individual choices aren’t purely private ones when they entail the use of public money.

“The simple fact of the prime minister’s energy policy is that it means each household’s choices on energy use and energy efficiency have direct consequences for the public finances. Laissez-faire libertarianism over the use of subsidised energy has a real and direct price for current and future taxpayers.”