The insulation industry, the fuel poor, and the planet all deserve better than this energy efficiency policy fiasco
Picture the scene. Two months after launching a car scrappage scheme to boost the auto industry the government halts the fund with immediate effect. That decision comes just a few months after the government takes a funding scheme for green cars that had been in the pipeline for years and had been the basis for multi-million pound investments in new manufacturing capacity by Nissan, Ford, and Mitsubishi, and cuts it in half, declaring the whole policy was "crap" in the first place. Meanwhile, a new government-backed car financing scheme gets off to a woeful start and the adverts attempting to promote it get banned by the advertising watchdog.
Imagine the response. The resulting job losses would be splashed across the front pages of the papers, the letters pages would be filled with indignant CEOs threatening to take their manufacturing investment elsewhere, questions would be being asked in the House, judicial reviews would be being readied, and somewhere Ed Miliband would be calling for an independent inquiry.
It is no exaggeration to suggest a version of this hypothetical scenario is precisely what has happened to the insulation and energy efficiency sectors. The industry was told in no uncertain terms by Ministers to scale up to deliver the national rollout of energy efficiency retrofits that is essential to tackling scandalous levels of fuel poverty and ensuring the UK meets its greenhouse gas emissions targets. And then it had the rug pulled out from under it because David Cameron thought it might win him a handful of votes.
The ridiculously short-sighted decision by Ministers to tackle high energy bills by cutting the energy efficiency schemes that provide the only sustainable means of cutting energy bills was always going to have a severe impact on the insulation and energy efficiency sectors, but now the chickens are really coming home to roost in the cold and draughty coop.
The fact that the insulation sector is dominated by small businesses means it is impossible to know precisely how many jobs have been lost as a result of the changes to ECO and the continued failure of the Green Deal scheme to deliver the anticipated levels of demand. We cannot verify whether the UK Association for the Conservation of Energy was right when it predicted the government's surprise policy changes late last year would result in 10,000 job losses and 7,500 new jobs foregone. Equally, there is no way of knowing if the government's prediction that, despite a little unfortunate turbulence for the industry this year, there will be 35,000 people working in the insulation sector in 2015/16 will prove accurate.
What we do know is that around 600 jobs have gone this summer at Domestic & General Insulation as a direct result of the government's policy choices, and a further 670 people are now facing redundancy at Mark Group. Many other smaller companies have also laid off workers who they had hired after the government talked up the demand that would be created by the ECO and Green Deal schemes.
We also know the current spike in demand for Green Deal financing schemes still leaves levels of demand far below that which was originally envisaged, just as we know much of the recent interest was driven by a grant scheme that was so crazily generous the £120m fund was burnt through in a matter of weeks. Cheerleaders for the Green Deal insist once this pipeline of heavily incentivised work has been delivered the momentum in the market will continue, and there is no doubt the Green Deal market is in a much better place than it was this time last year. However, plenty of the people working in the market remain unconvinced that the current jump in Green Deal numbers is anything more than a pre-election blip created by £120m of government largesse. The Green Deal may be making much-needed progress, but no one in the industry, nor in Westminster for that matter, has the faintest idea what will happen to it after the next election.
The other thing we know is that the Big Six energy companies are building up a sizeable windfall as a result of the byzantine detail contained in the ECO reforms, which allowed them to fund the upgrade of even fewer homes than originally planned. DECC insisted a couple of months ago that it was keen to address the issue and had invited the energy companies to explain what they would do with the windfall, but as yet there has been no confirmation on what, if anything, will be done.
The final thing we know, indeed have always known, is that energy efficiency measures are the most cost-effective means of tackling fuel poverty, reducing energy bills, enhancing energy security, improving public health, and cutting carbon emissions. The Committee on Climate Change argues that domestic energy efficiency is essential to hitting our carbon targets, just as fuel poverty campaigners argue it is the only way of dealing with the national disgrace that is our cold-induced winter death rate. The benefits of upgrading the UK's building stock are so blindingly obvious that this should be the one aspect of decarbonisation it is easy to get everyone's agreement on.
The auto industry, the finance industry, the utility sectors, none of them would ever have been treated like this. But the diffuse nature of the energy efficiency sector and the voiceless nature of the fuel poor has allowed this most important of issues to fall victim to the most craven example of political short termism.
The ECO scheme was anything but perfect, and yes, it is vital that Ministers always keep a close eye on any scheme that is funded by billpayers. But if the government wanted to change the schemes it required measured and timely reform in proper consultation with industry, just as would be offered to more glamorous parts of the economy. Instead, many of the people who should be delivering the home improvements the UK desperately needs are now facing redundancy as a direct result of the government's knee-jerk response.
For all the damage done by this boom and bust cycle, the election provides a natural opportunity for a fresh start. The Green Deal scheme or some alternative based on energy efficiency finance models may, with proper regulation and incentives, yet deliver significant improvements. Designating energy efficiency as a national infrastructure priority would allow ministers to fund energy saving measures in the same way they are funding more costly new energy generation infrastructure. For clear political, economic and environmental reasons, all three main parties should be making energy efficiency policy a priority as we head into the winter.
And yet David Cameron continues to create the impression he has not given energy efficiency policy a second thought since he took the axe to a scheme that was crucial to both the warmth and well-being of thousands of fuel poor households and the prospects of an entire industry. He should not be allowed to forget that his policy mis-management and short-termism has had truly "crap" results for those businesses who trusted him when he said he wanted "to make Britain the most energy efficient country in Europe".
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