National insulation scheme could inject £7bn into UK economy and slash bills, study says

The government has "entirely neglected" some of the cheapest ways of dealing with the energy crisis, which has sent bills soaring, experts have said.

A government programme to insulate homes and install heat pumps could boost the country’s flagging economy to the tune of £6.8bn by 2030 and generate up to 140,000 jobs, according to a major analysis commissioned by Greenpeace and undertaken by Cambridge Econometrics – a data research organisation.

The report’s authors said the government targets for energy-saving upgrades remain "woefully off track", with home insulation installations falling 50 per cent this year, and sales of heat pumps per household in the UK the lowest in Europe in 2020.

They said that scaling up the delivery of these green home upgrades could provide huge economic and social benefits - including to those on low income, older people and people of colour, who tend to be most exposed to risk of fuel poverty – while also easing the cost-of-living and climate crises by slashing bills and carbon emissions.

Greenpeace UK’s chief scientist, Dr Doug Parr, said: “The UK is in an economic, energy and climate meltdown. Yet the government continues to shun the green home upgrades that offer a viable way out of this mess. It’s truly baffling.

“Greening the UK’s homes at speed and scale will reduce energy consumption, bills and carbon emissions. It will provide tens of millions of households with warmer homes that are cheaper to run and help limit the catastrophic impacts of the climate crisis."

He added: “Those reasons should be enough on their own, but what’s key is that, as the UK is hurtling towards a recession, it could give a boost of  almost £7bn for the economy by the end of the decade. Insulation and heat pumps may not be sexy but they sure are effective.”

The analysis predicts that soaring gas prices will be sustained to 2030, while the price of electricity will start to fall from 2026, as renewables make up a greater proportion of the UK’s energy mix and market reforms bring electricity prices back to 2020 levels by 2030.

The team at Cambridge Econometrics assessed recommendations set out by the government’s climate advisors, the Climate Change Committee (CCC), for decarbonising housing.

These recommendations include upgrading the energy efficiency of all the UK’s housing stock, through installing wall, loft and floor insulation as well as double glazing. This would bring all homes up to a minimum of Energy Performance Certificate C standard over the next 10-15 years.

The CCC recommendations also include ramping up the deployment of low-carbon heat pumps so that installations reach 900,000 per year by 2028.

Such a scheme would be funded partly through existing government grants such as the Boiler Upgrade Scheme - which currently offers grants of up to £5,000 for air source heat pumps.

A drive for more insulation and double glazing would require further government funding to cover around half of the investment. The remaining costs would be paid for by homeowners and landlords.

Jon Stenning, head of environment at Cambridge Econometrics, said: “The recent and highly damaging rapid increases in fossil fuel prices have fundamentally altered the economics of the transition.

"Improving the quality of the UK’s housing stock and switching to low-carbon heating technologies can bring down household bills immediately, and remove struggling households from having to choose between heating and eating this winter, while also delivering greater economic growth and substantial carbon emissions savings in the long term.”

Greenpeace UK is calling on the government to deliver £7bn of funding over the next two years, with an emergency funding package for short-term measures, to upgrade the energy efficiency of homes across the UK through the installation of insulation, double glazing, draught-proofing, heat pumps and other energy-saving measures.

The organisation is also calling for more immediate support to tackle the cost-of-living crisis, with extra welfare support for those in most need, funded in part by permanently increasing the tax rate on oil and gas company profits to the global minimum of 70 per cent.