Labour appears poised to win a historic election victory on 4 July. In the series Life under Labour, we look at Keir Starmer’s five key political missions, and ask what is at stake and whether he can deliver the change the country is crying out for.
Millions of people across the UK are struggling with energy poverty, stuck in cold and frequently damp homes, unable to afford to heat them properly, often forced to choose between eating and heating.
By this winter, yet more families may be stricken: though the energy price cap is likely to come down by about 7% in July, experts estimate that in October it will bounce up again by as much as 12%, dragging many more people into misery.
Meanwhile, households without prepayment meters owe a record £3bn to energy suppliers, so that even now in summer, they are still trying to pay off their accumulated debt.
“Energy bills are just totally unaffordable,” says Peter Smith, the policy director of National Energy Action. “People are going without all of the essentials that energy provides – their homes are cold and damp, they have no hot water, they can’t dress their children in clean school uniforms or give them hot meals, and they’re living in the constant misery of knowing they’re in debt. Without further support from the next government, their lives will stay this bleak.”
The increase in the number of people struggling with energy bills to the current 6m has been stark. There were 4.5 million people in energy poverty in October 2021, a marked leap from 3.5 million in 2010. In the early 2000s, the number was just over a million, but it shot up during the 2008-09 financial crisis.
For a Labour government, solving these problems will be one of its biggest tests. Even households that can afford to turn the radiators on are feeling the pinch, and soaring energy prices have been a key factor in the huge hikes in inflation of the last two years. Starmer has made it clear that the party’s energy strategy is at the core of its commitment to tackle the cost of living.
“Family financial security depends on energy security,” he told the launch of his GB Energy plan in May. “The pain and misery of the cost of living crisis was directly caused by the Tories’ failure to make Britain resilient, leaving us at the mercy of fossil fuel markets controlled by dictators like Putin. It doesn’t have to be this way.”
But how effective will Labour’s plans be in tackling energy poverty and what difference could they make to the lives of the 6 million Britons currently struggling?
Energy is the second of the five key “missions” in Starmer’s pitch to be prime minister. The vow is to “make Britain a clean energy superpower, to cut bills, create jobs and deliver security with cheaper, zero-carbon electricity by 2030, accelerating to net zero”. This will be done in part through the creation of GB Energy, a publicly owned entity that will invest alongside private sector suppliers.
Starmer’s pledge puts the focus on electricity generation, though at present electricity represents only about a fifth of the energy used in the UK, with the rest in the form of oil and gas for heating, transport and industry.
But electricity will play a much greater role as the UK moves to net zero. Gas will no longer be used for home heating, as nearly all homes will need to use electric heat pumps. Electric vehicles will replace diesel and petrol cars. Industry will move to cleaner processes, such as forging green steel in electric arc furnaces instead of using coking coal.
Jan Rosenow, the director for European programmes at the Regulatory Assistance Project thinktank, says: “The UK is blessed with a huge resource for renewable electricity [particularly in the form of wind power]. Electrification is the most efficient way of using renewable electricity in sectors that now rely on oil and gas.”
Electrifying everything will mean much more power needs to be generated. For it all to be zero carbon will require a vast increase in wind turbines and solar panels. New nuclear reactors are also likely to be needed, as well as some facilities for capturing and storing the emissions from the remaining gas-fired power plants.
There is a paradox in putting electricity rather than energy in the spotlight: the more successful the UK is at switching people to heat pumps and electric vehicles, the harder the zero-carbon electricity target will be to meet.
Labour could, in theory, make it easier by reining back efforts to cut emissions from transport and home heating, which would be a perverse outcome. But the party is committed to the UK’s legally binding targets on greenhouse gas emissions for 2030, and reaching net zero emissions by 2050.
Currently, the UK is well off-track to meet net zero. After 14 years of stop-start green policy under Conservative prime ministers – which took the UK from David Cameron’s boast of “the greenest government ever” to his “cut the green crap” a few years later, and from Boris Johnson’s ebullient hosting of the Cop26 Glasgow climate summit to Rishi Sunak’s vow of “maxing out the North Sea” – the whole landscape of energy policy and the race to net zero is a mess.
New onshore windfarms are in effect banned in England, solar farms face planning obstacles and new homes are still being built with gas boilers and without solar panels. It can take a decade to get a grid connection to new green energy installations, while prospective new nuclear plants are wildly overbudget and long delayed. There is no scheme for insulating homes, and heat pumps are still expensive rarities.
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“By committing to ensure all our electricity is clean and produced at home, Labour is paving the way for cheaper bills, and the end of our exposure to volatile fossil fuel prices,” says Mike Childs, the head of policy at Friends of the Earth. “Achieving this will be a herculean task, but feasible so long as the party hits the ground running by embracing onshore renewables, boosting our grid capacity and building more offshore wind.”
Money will be tight. Labour initially planned to invest £28bn a year on its “green prosperity plan”, but that spending commitment was roughly halved amid fears of Tory “tax and spend” attacks – even though experts argued the money would be an investment that would be swiftly paid back in economic growth.
Some of the measures needed are simple: on day one Labour could scrap restrictions on building onshore wind turbines. Housebuilders can be ordered to put solar panels on new or refurbished developments, and landlords will be required to meet minimum energy efficiency standards, knocking an estimated £6bn off the cost of home insulation for low-income families.
Private sector companies will also play a big role. National Grid is to invest £30bn in the UK over the next five years. Given the woeful state of the UK’s grid after decades of underinvestment, getting new renewable energy installations connected can take years. The grid is also poorly equipped to handle the “smart” technology needed with intermittent renewable energy generation – that will not be enough to solve the UK’s grid problems, but offers a start.
Adair Turner, a former head of the CBI and ex-chair of the Climate Change Committee, who is now chair of the Energy Transition Commission thinktank, believes the task is “doable”.
“It’s going to be quite a fork in the road for UK climate policy,” he says. “It will be a stretching and demanding ambition and maybe we won’t quite get all there, we may get to near zero, but it will be a very important forcing device to drive forward the policies that are required on storage, flexibility and interconnection. If we get near to it, it will be a very important example to the rest of the world of the feasibility of achieving a net zero electricity system.”
Labour will be under fierce pressure to provide more investment. RenewableUK estimates that the current budget of £800m for the auction of offshore wind contracts investment will provide about 3GW of offshore windfarms, which would save billpayers about £10 to £20 a year. To reach the decarbonisation target, more will be needed, so the trade body is urging Labour to nearly double the budget available to £1.5bn, which it says will secure 10GW of offshore wind and produce bill savings of £24 to £40 a year.
The next auction is in early August. Nathan Bennett, a director of RenewableUK, says: “As the next government could increase the budget within the first few days of entering office, to unlock billions of pounds of new private investment in clean energy, this really will be the first test of how ambitious they’re going to be on renewables and green growth.”
Where most money will need to be spent, argues Smith of National Energy Action, is on the poorest households. Solving energy poverty is well within Labour’s grasp, through better insulation. This would cost about £18bn for those unable to afford their own improvements, or just £12bn if private sector landlords were forced to bring homes to a minimum standard, according to National Energy Action.
That amount is roughly what Labour has committed to spend on energy efficiency in the next parliament. Directing the bulk of it to the poorest would leave little to help the “squeezed middle” of households that are not in energy poverty but still unable to afford insulation. But, says Smith, the benefits will far outweigh the cost – a saving of at least £1.5bn a year in direct costs to the NHS alone, savings on utility bills, reductions in carbon dioxide emissions, plus improvements in physical health, employment and productivity, air quality, educational attainment and mental health.
“You can imagine the relief of families not having this burden on them,” he says. “It would be life-changing in every way.”