KJM campaigns for a reduced rate of VAT for energy efficient home improvements

KJM campaigns for a reduced rate of VAT for energy efficient home improvements

In light of the recent eyewatering increases in the cost of wholesale gas, the price suppliers need to charge per unit of energy has gone up significantly. As the Office of Gas and Electricity Markets (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 2022.

To help protect consumers, the Government has announced the Energy Price Guarantee which comes into effect on 1 October 2022. This new scheme will reduce the unit cost of electricity and gas so that a household with typical energy use in Great Britain pays, on average, around £2,500 a year on their energy bill, for the next 2 years. This price is not a maximum you will pay, so if you leave your lights on all day and heating on with your doors and windows wide open, you will pay much more. On average usage a household will save £1,000 a year on what they could have been charged (based on current prices from October). Energy suppliers will be fully compensated by the government for the savings delivered to households.

For most people the rises are still quite alarming as 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. So 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 created by Russia invading Ukraine, sanctions imposed and now energy being used as ‘a weapon’ against the West 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.

There have been many attempts by this government to enhance the UK housing stock energy performance. It scrapped its flagship Green Homes Grant Scheme in March 2021 – only six-months after it was launched. Sadly in 2013 it tried to introduce ‘The Green Deal’ it was axed in 2015 only a little over two years in. The scheme was overcomplicated as most window companies barely qualified for either scheme. The returns for those companies that did were poor to say the least.

If the industry and government want to learn from the mistakes of the past, we need the Government to move forward with a new green home improvement scheme for the UK. Most importantly, it must be simple for both the homeowner and the industry to implement without so much red-tape.

The current levels of 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 because they can afford to improve the energy efficiency of their properties without government support.

A simple solution would be a cut in VAT for energy efficient installations and the availability of a new Government backed green finance package if you can’t afford the improvements, would be simple to understand and to administer. A package of VAT rates for better insulated products. Personally, I would love to see a 5% rate for triple glazing with a u-value below a certain level and maybe a slightly higher second tier for insulation that improves on what was originally there, like double glazing.

I believe higher energy prices will be with us for quite a while yet. The recently introduced policy of the Energy Price Guarantee will run out in 2024 after only two-years, so this will sharpen the mind further to improve our homes energy efficiency

A lower rate of VAT for energy efficient windows and doors would be a great government. I will wait and see.

KJM Group supplies an extensive range of low maintenance and energy efficient windows and doors, throughout Hampshire, Berkshire, Surrey, Dorset, and Wiltshire. This includes secondary glazing, casement, tilt and turn and vertical sliding windows and doors in PVC-U, timber and aluminium and energy saving triple-glazed windows with U-values as low as 0.66W/m²K.

For more information on our range of energy efficient windows and doors please don’t hesitate to call or email me or the sales team on 01264 359355 or sales@kjmgroup.co.uk.