Archived press release

Chancellor must help householders combat climate change

19 November 2004

The Chancellor should give householders stamp duty rebates and other financial incentives to encourage them to carry out green home improvements aimed at combating climate change, Friends of the Earth said today. The environmental organisation is calling on the Chancellor to put the fight against global warming at the heart of his pre-Budget statement on 2 December.

The domestic sector is responsible for producing around a quarter of UK emissions of carbon dioxide (CO2) - the main greenhouse gas which is produced by burning fossil fuels such as coal, oil and gas - largely from heating homes and generating electricity for appliances. But budgetary action by the Chancellor could encourage people to save energy [1] and switch to less polluting forms of energy such as solar power.

Friends of the Earth wants Gordon Brown to adopt a range of measures to make it easier and cheaper for householders to cut their emissions. The recommendations, which are included in Friends of the Earth's Blueprint for a Green Budget [2], include (more details below):

1. Encourage households and small businesses to install small-scale renewable energy, such as solar panels, by increasing grants for installation;

2. Encourage homes to be more energy efficient by reducing VAT on DIY insulation and low energy light bulbs from 17.5 per cent to 5 per cent , and introduce measures such as a stamp duty or council tax rebates to encourage home-owners to make their homes more energy efficient;

3. Ensure that new homes are built to highly energy efficient standards.

Friends of the Earth economics coordinator, Simon Bullock, said:

"The Chancellor must put the fight against climate change at the heart of his pre-Budget statement. By introducing a few simple measures, Gordon Brown can make it easier and cheaper for householders to play a major role in the fight against global warming."

"Households could cut their bills by a third through energy efficiency measures. The Chancellor must make it easier for homes to be powered by clean, green renewable energy, provide incentives for people to save energy and end the ridiculous situation where we pay over three times more tax on saving energy than we do for using it."

1. ENCOURAGE HOUSEHOLDS TO INSTALL SMALL-SCALE RENEWABLE ENERGY (See case studies below)

   The Chancellor should encourage households to generate their own renewable, or low-carbon, energy using technologies such solar power, micro wind and hydropower turbines and wood-fuel boilers. Measures should include stamp duty rebates for low-carbon homes, increasing grants for installation and making it easier for small energy generators to sell excess electricity to the National Grid.

   As well as cutting carbon dioxide levels, these measures would increase the UK's security of energy supply and reduce the need for investment in new and costly power stations.

2. ENCOURAGE HOMES TO BE MORE ENERGY EFFICIENT:

   * Cut VAT on energy efficiency products

   The Chancellor must do more to encourage homes to be energy efficient. The average household spends around £610 each year on energy bills. But this could be cut by a third through energy efficient measures.

   Householders wishing to install energy efficient products in their homes (such as insulation or energy -efficient light bulbs) to cut their energy-use are charged 17.5 per cent VAT. But they are only charged five per cent VAT on their fuel bills. The Chancellor must ensure that VAT on energy efficient materials and products is reduced to 5 per cent [3].

   * Give stamp duty rebates or council tax rebates for energy efficient homes

   Home-owners would also be encouraged to make their homes more energy efficient if they were given a stamp duty rebate for making sufficient energy efficiency improvements within the first six months of buying their new home. Council tax rebates can also be used to encourage energy efficiency. Braintree District Council in Essex launched a scheme on 10 November with British Gas where householders who install cavity wall insulation will be able to claim a £100 rebate on their council tax.

   An energy rating will be compulsory for every home sold if home information packs are introduced, possibly in 2007.

3. ENSURE THAT NEW HOMES ARE BUILT TO HIGHLY ENERGY EFFICIENT STANDARDS

   New homes should be built to high environmental standards. The Government should end blanket VAT breaks for new house-building, but introduce incentives for new homes meeting high environmental standards (energy efficient, building on brownfield sites etc).

Notes

1. Friends of the Earth has produced a number of simple tips on how consumers can reduce their contribution to climate change, not only helping the planet, but saving money too. Climate Challenge

2. Friends of the Earth's Blueprint for a Green Budget, and further press releases on the need for the Chancellor to put the fight against climate change at the heart of his pre-Budget statement - including Increasing tax on gas-guzzling 4x4s and giving cash incentives for motorists to buy greener cars - can be found here.

3. VAT is charged at five per cent on energy saving products provided it is installed by a builder, who can then claim the VAT back.

Case studies

• A nursery school with 25 children near Honiton, Devon has installed a wood pellet fired heating system with a 100% grant from the Clear Skies programme. Now instead of the children having to wear coats in class because of the cold, they are warm and hang their paintings to dry on the side of
  the heaters. Fuel bills have fallen enormously now they are no longer using LPG and electric heaters.

• A man in Clapham, London has installed solar thermal panels on the roof of his family's
  Victorian house. The panels cost around £4000 to install and in summer provide most of their hot water.

• A developer has renovated 1950s property in Crowborough in East Sussex. The 4-bedroom
  semi-detached house uses a ground source heat pump for under floor heating and solar powered water heating in the roof, which saves 40% on energy bills.

• A kite business near Bridgend in Wales has installed two bio-mass fuel stoves which run on wood waste pellets. Each stove cost around £1,900 and they heat a 3,000 sq foot warehouse. They are energy efficient, costing about £6 per day to run in cold weather. The business received a 30% grant towards installation. The stoves look attractive and customers enjoy relaxing on sofas next to them.

If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.

Published by Friends of the Earth Trust