A total of 41 organisations have joined forces with the Energy Efficiency Infrastructure Group (EEIG) as signatories of a letter to the Chancellor of the Exchequer urgently calling for an Energy Saving Stamp Duty Incentive to provide a long-term, revenue neutral, structural driver for retrofitting the UK’s owner-occupied homes and for more sustainable new homes
The Rt. Hon. Rishi Sunak MP Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road London SW1A 2HQ
25 January 2022
Dear Chancellor
New housebuilders would be encouraged to move to higher building standards in advance of being required to by regulations.
Homeowners can be incentivised – nudged but not told – to improve their own homes to allow funding to be directed to those that don’t have means or access to finance. To realise this, the UK Government should provide an incentive for homeowners that goes beyond one-off, shorter-term grants for specific technologies. Whilst delivering low-cost measures, boom-bust grants have failed to produce a legacy of delivery capacity – vital for sustainable and efficient supply chains.
UK Government urgently needs low-cost, long-term structural incentives to plug this significant tenure gap, which realistically can be announced in this Parliament. By giving a policy signal, or statement of intent now, with implementation in 18 months to two years, businesses have the time to work with government, smoothing the road to roll out and ramp up thus ensuring the skills, capacity and quality to deliver the requisite retrofit programme, in the knowledge there is market demand at the end.
An Energy Saving Stamp Duty Incentive
This is an effective intervention, backed by groups ranging from: Consumer finance organisations, consumer facing groups, retailers, builders / installers and manufacturers. It will ensure that installation of vital energy efficiency measures become part of the house purchase process, acting as a driver for discussions with banks or other lenders about funding. The incentive will encourage people to actively think about the energy performance of the home they are considering purchasing, about potential improvements, consider any retrofit costs and plan ahead to realise the rebate, reducing the cost of retrofitting under-performing homes.
An Energy Saving Stamp Duty Incentive is not a silver bullet – and we are not suggesting that any rebate should cover the full cost of works that might be needed. We are, however, proposing a rebate significant enough to get homebuyers’ attention and create the conditions for homeowners and purchasers to invest in, and improve, their own homes.
We need to encourage home purchasers’ involvement and action when disruption is least and ensure retrofit activity is steady over the long term, to deliver lowest cost and best quality – where businesses are confident to invest and trade on their reputation, not struggling to expand when grants are available and focused on downsizing when they are gone.
Stamp Duty already exists and an Energy Saving Stamp Duty Incentive could prove more effective, and simpler, than a large-scale, short-term, costly grant programme – whilst also being revenue neutral. It can be adopted quickly, to be fair to homeowners, and sufficiently rapidly to give the UK Government the chance to reach its target of a 78% reduction of UK greenhouse emissions by 2035.
To verify performance improvements, this policy needs to be underpinned by an EPC regime based on real, verified performance data – actions BEIS are actively delivering. This will simultaneously enhance retrofit and building standards and give homeowners the ability to hold installers/builders to account for the quality of their work. In addition, it is important that there is an independent and impartial advice and support service in England to help households with their journey to low energy homes.
We accept that an Energy Saving Stamp Duty Incentive is not the first thing that springs to mind. We are fully aware that keeping taxes as simple as possible is in Treasury DNA. However, there is a dearth of palatable alternatives capable of creating the scale of action required.
An Energy Saving Stamp Duty is the very best of all the alternatives for owner occupiers who are not fuel poor – with their heat and power – representing 12% of the UK’s emissions.
We urge you to engage the power of the market and start a two-decade long retrofit campaign.
We would be delighted if a small delegation, from the organisations that support this initiative, could meet with you to discuss how it could work. Please contact David Adams, EEIG Energy Saving Stamp Duty spokesman at david@theeeig.co.uk and we look forward to your response.
Yours sincerely
Chairman