Scrapping green subsidies is short-termist sabotage – and as usual the consumer will pay | Camilla Born

After years of painfully high energy bills, shrinking household budgets and stagnating investment, this year’s Budget on November 26 is expected to be the moment when the Government finally begins to question why the UK’s energy system is so expensive. And yet, if recent briefings suggesting Labor would slash subsidies for household heat pumps are to be believed, they are now repeating exactly the same mistakes as their predecessors.

People want relief from their painful energy bills. In the long term, electrification is the only way to achieve this. In practice, this means moving from gas boilers to heat pumps, from gasoline cars to electric vehicles: facilitating access to modern technologies that are less expensive to operate and are already becoming commonplace. Currently, our energy system protects the old gas-based system, subsidizing supply and penalizing demand in ways that keep gas artificially cheap and electricity artificially expensive, even when electric technologies cost less to operate.

This is why the recent briefings are so alarming. The Treasury is reportedly considering scrapping the Energy Company Bond (ECO), which is the UK’s only large-scale, long-term scheme that funds home insulation and energy efficiency improvements for low-income households. If these reductions materialize, the warm houses plan risks being emptied of its substance. The briefings also suggest the government will impose a new per kilometer tax on electric vehicles, as well as introduce a congestion charge for electric vehicles, just as the electric vehicle market begins to boom. We will have to wait for the budget to see which of these measures Chancellor Rachel Reeves decides to implement. But the fact that they have been informed suggests that Downing Street believes that slashing support for electric technologies is a sensible and cost-effective move.

This would be even more short-sighted than the previous Conservative government, whose commitment to cutting “green crap” is said to have added £22 billion to household energy bills since 2015. It is still the consumer who pays for the short term: although ministers can announce a temporary reduction in budget bills, this reduction cannot last, because the refusal to tackle the levies and political costs that make electricity artificially expensive means that bills will simply rise again once more new levies will have been introduced. Energy company EDF predicts that bills will likely be around 12% higher in 2030 than they are today.

Our politicians would rather do anything than address these underlying issues, which is somewhat ironic, given Prime Minister Keir Starmer’s initial promise to end the previous 14 years of ‘sticky plaster politics’. Take heat pumps. These significantly reduce the energy needed to heat a home and, after years of delays in deployment and mass adoption, they are finally ready to scale. Households are starting to opt for them over gas boilers, installers are investing in training, staff and equipment to meet growing demand, and manufacturers are increasing production and reducing costs. Heat pumps consume much less energy to offer the same comfort as gas: their sole objective is to help households permanently free themselves from expensive heating. This should be the time to accelerate on technology.

Instead, the government would consider cutting the only national support scheme, the Boiler Retrofit Scheme, which provides grants to households to reduce the initial cost of installing a heat pump.. This would erode confidence in heat pumps, stall progress and push households onto more expensive heating for another decade. It’s much the same story as the CEE: scaling back would leave people colder, poorer, and permanently overexposed to volatile fossil fuel prices and inefficient homes.

All of these ideas are based on a fundamental misunderstanding that electrification is the cause of high bills or, at best, a luxury the UK cannot afford. Yet supporting electrification is the only real way to escape high bills. Nearly 40% of a typical electricity bill is not energy at all: it is fixed charges and legacy costs (the full cost of decarbonization and grid upgrade programs is passed on to electricity bills, while gas bills are largely shielded from these political costs, for example. Until these distortions are corrected, electricity will seem expensive, even if the technologies that consume it are actually cheaper to exploit.

The government appears poised to weaken technologies that rely on electricity, mistakenly believing that a temporary drop in energy prices would ease the cost-of-living crisis long enough to improve poll numbers and avoid more politically difficult choices, such as an income tax increase. Yet by the next election, most of the savings from these cuts will be gone, and they will have been for nothing. There is no serious future for affordable British energy without accelerating electrification. Tools such as heat pumps and electric vehicles reduce energy consumption, stabilize bills and give households real control over prices. Weakening them now risks locking Britain into a permanently costly energy system.

We already know what happens when a government destroys insulation and clean energy programs. This costs households billions in higher bills and delays the transition to a cheaper, greener energy system. If Labor repeats this mistake, the consequences this time will be even more serious, because the UK has already exhausted its margin for error: bills are higher, housing is less efficient than that of our European neighbors and there is much less fiscal space to bail out households when prices inevitably rise in the future.

If ministers want lasting reductions in bills, not temporary relief, they should stop undermining electrification, fix the system that keeps electricity expensive and put consumers, not producers, at the center of Britain’s energy future. Otherwise, we will look back on this budget as the government’s missed a huge opportunity.