The Chancellor's Plan for Growth includes a £1bn expansion of the Energy Company Obligation (ECO) over three years, starting from next April1. The scheme requires energy companies to install energy saving measures in fuel poor homes1. The End Fuel Poverty Coalition, which reported the measure, said it was "hidden away in the small print" of the Plan for Growth1.
The new funding will be targeted at those most vulnerable, and made available for the least efficient homes in lower council tax bands1. The government also said it would "imminently open applications for up to £2.1 billion over the next two years to support local authorities, housing associations, schools and hospitals invest in energy efficiency and renewable heating"1. The Plan for Growth also set out an end to the effective ban on building on-shore wind in England1.
"Hidden away in the small print of the Chancellor's Plan for Growth is an announcement to expand the Energy Company Obligation (ECO) ... with a £1bn boost over three years, starting from next April"
The Coalition gave the ECO expansion a qualified welcome. It said the funding "will provide vital relief for the households that stand to benefit" but that "alone it cannot shift the dial on the resilience of UK households to energy price shocks now or in future"1. It cited analysis by E3G estimating the sum is about a fifth of the amount needed to be spent on green building measures, and said the opportunity was missed to meet the Home Upgrade Grant Conservative manifesto pledge, which it said is "still £1.4 billion short of what should have been committed to 2025"1.
The announcement came against a sharp rise in bills. The average household bill in winter 2021/22 was GBP1277, rising to GBP2,100 for winter 2022/23 taking into account support promised so far, according to the Coalition1. For some of the most vulnerable households the increase will be limited to an average household bill of GBP1,700 this winter, still a 33% increase year on year1. The Coalition noted the Energy Price Guarantee caps the unit cost of energy, not the total bill1.
| Measure | Figure |
|---|---|
| ECO expansion | £1bn over three years from April 20231 |
| Public sector energy efficiency and renewable heating applications | up to £2.1bn over two years1 |
| Average household bill, winter 2021/22 | GBP12771 |
| Average household bill, winter 2022/23, with support promised so far | GBP2,1001 |
| Average bill for some of the most vulnerable households this winter | GBP1,7001 |
The Coalition estimated 4.6m UK households were in fuel poverty in winter 2021/22, rising to 6.99m in winter 2022/231. It said the start of the Chancellor's "new era" would see 7 million households left facing fuel poverty this winter, and that bills were due to increase by 64% compared to last winter1. Separate Age UK analysis found that from October 2022 around three in ten older households in England will be living in fuel poverty, including 1.3m lower income older households1.
Why it matters for households
The Energy Company Obligation is one of the routes by which a home can receive energy saving measures without paying the full cost, because the funding comes from energy suppliers rather than the householder. The expansion adds £1bn over three years from April 2023 and directs it at the least efficient homes in lower council tax bands, so eligibility is tied to both the property and the occupant1. For a home that qualifies, measures such as insulation reduce the energy needed to keep it warm, which lowers exposure to unit price rises over the long term. The Coalition's position is that the sum is small relative to the scale of the problem: it is about a fifth of what E3G estimates is needed for green building measures, and the Home Upgrade Grant remains £1.4bn short of the 2025 commitment1. The Energy Price Guarantee limits the unit cost of energy rather than the total bill, so a household's bill still depends on how much energy the home uses1. No detail on how the expanded obligation will be administered, or on which specific measures will be eligible, has been reported.
What happens next
The ECO expansion begins in April 20231. Applications for the £2.1bn of public sector funding were to open imminently at the time of the announcement1.
Sources1 cited
- Mini-Budget minimal on help for those in fuel poverty - End Fuel Poverty Coalition, endfuelpoverty.org.uk