The House of Commons business, energy and industrial strategy committee reported on 3 February 2022 that the government's approach to decarbonising home heating lacked clear direction, and that current policies are not on the scale required1. The finding was carried in coverage of the committee's work published the same day1.
The committee's warning came as the energy regulator Ofgem prepared to announce an expected £650, or 50%, increase in the energy price cap, taking it to more than £1,900 per household per year, with the rise to apply from the beginning of April1. The announcement was brought forward by several days1. The chancellor, Rishi Sunak, was expected to respond immediately with a House of Commons statement1.
"the government's approach to decarbonising home heating lacked clear direction"
Reporting on the government's "levelling up" white paper, published the previous day, said the "need to reach net-zero" and green jobs received scant attention, with the "green industrial revolution and transition to net-zero" listed close to the bottom of 16 priorities1. While the government promised £26bn of capital investment, analysts said it was not clear whether any of this was new money or how it would be spent1. Campaigners said the strategy lacked any commitments to better insulate UK homes or reduce reliance on expensive imported gas1. The few examples of green investment cited included £1bn for electric vehicle manufacturing and battery gigafactories, and £1bn for carbon capture and storage1.
On household bill support, the chancellor was expected to cut £200 from all household energy bills, with money loaned to power companies and passed directly to consumers, and clawed back later through a levy on future bills when wholesale prices fall1. The existing warm homes discount, worth £140 for 2.7m households, was the focus of plans to expand targeted help to the 8.5m households receiving universal credit and other state help; a £300 payment to that group could cost about £2.5bn, which the Treasury would not recover1. Under such a proposal, all households would receive £200 off a projected £650 increase, with poorer homes getting a £500 discount1. Ministers ruled out cutting VAT on energy as "blunt" and expensive, while scrapping green levies was deemed impossible because the government is contractually obliged to pay most of them1. Treasury officials had also been preparing plans for a council tax rebate targeted at the lowest property bands1. The Treasury declined to comment on "speculation"1.
| Measure reported | Value |
|---|---|
| Expected rise in the energy price cap | £650 (50%), to more than £1,900 per household per year |
| Proposed cut to all household energy bills | £200 |
| Existing warm homes discount | £140 for 2.7m households |
| Possible payment to households on universal credit and other state help | £300, costing about £2.5bn |
| Combined discount for poorer homes under the reported proposal | £500 |
Why it matters for households
The committee's finding concerns the fabric of the housing stock and the equipment that heats it, which sit behind the running costs a household cannot easily change in the short term. The energy efficiency of the UK housing stock determines how much of each unit of gas or electricity is retained as heat rather than lost, so a home's exposure to a price cap set at more than £1,900 a year is partly fixed by its walls, glazing and ventilation. The reported absence of insulation commitments in the levelling up strategy means the policy route to reducing that exposure was, on the committee's assessment, not set out1.
The bill support described is a transfer of cost rather than a reduction in it: the £200 is loaned to power companies and recovered later through a levy on future bills1. That leaves the underlying consumption unchanged. For a household, the practical difference between a discount and a lower bill is the difference between a deferral and a permanent cut, and only measures that reduce demand or shift the heating source change the second. The UK home energy regulation and policy guide sets out where those decisions are made.
What happens next
Ofgem's price cap announcement was due on the morning of 3 February 2022, with the chancellor expected to make a Commons statement immediately afterwards1. The higher cap was to apply from the beginning of April 20221. It had not been reported whether the support measures would be ready by that date, and energy bosses told the BBC they had been kept largely in the dark about the government's plans1.