Open letter – Ryan Johnson, Managing Director, Emplas Group

Buy now or pay later. Why we need to cut VAT on energy efficient home improvements.  

Ryan Johnson, Group Managing Director, Emplas

As OFGEM put it, ‘the good news is’ that the Energy Price Guarantee, means that energy bills will not now top £3,500 as they had been expected to do from the start of October. 

As it somewhat more mutedly acknowledges, the new upper limit on average household energy bills still represents an increase of more than £1,000 on where bills were, prior to the lifting of the energy price cap in April this year.  

In short, the Energy Price Guarantee is something that will be of only limited comfort to the millions of UK households struggling to heat their homes this winter.  

The energy crisis has served to highlight our over-reliance on fossil fuels – and just as predictably, the inherent energy inefficiency of the UK’s housing stock, which accounts for around 14% of UK carbon emissions. 

Despite this the Government scrapped its flagship Green Homes Grant Scheme in March 2021 – only six-months after it was launched. And it has form in this area.  

The Green Deal was axed in 2015 only a little over two years in. Window companies barely qualifying for either scheme and offering only very limited returns for those companies that did. 

Learning from the mistakes of the past will be important if, as many suggest, the Government is to move forward with a new green home improvement scheme for the UK. 

Most importantly, it must be simple. Simple for homeowners to understand and simple for companies to subscribe to.  

Energy prices give people a real incentive to enhance the thermal efficiency of their homes. This helps the Government to hit its commitment to reduce CO2 and it stimulates the economy at a time when without wishing to talk it down, things appear fragile.  

There are many homeowners who will commit to improve the energy efficiency of their properties without government support.  

The cut in stamp duty on the first £250,000 of the sale price and £425,000 for first time buyers seen at the end of last week [23/9/22], should at the very least, hold house prices firm, giving people the confidence to invest.  

Higher energy prices are forecast to be with us longer term – the Energy Price Guarantee will run out in 2024 after only two-years (something that you may wish to point out to retail prospects who need a nudge to take the plunge!).  

Others will, however, need government stimulus and support to help cover the costs of improvements and to access finance.  

A cut in VAT to 5% (or less), and the availability of a new Government-backed green finance package, would be as simple to understand and administer, as it would in my view – and I know in the opinion of many others in our industry – be successful.  

We wait to see.  

Ryan Johnson. 

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