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Urgent action needed on UK energy price rise, says REA

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Action must be taken on energy bills after inflation rose by 5.4% in the UK, according to the Association for Renewable Energy and Clean Technology (REA).

The REA recently published a six-point plan to help tackle the crisis, with the Joseph Rowntree Foundation warning that rising energy bills could ‘devastate’ the budgets of families on the lowest incomes. The Resolution Foundation says the number of families suffering from ‘fuel stress’ is set to treble overnight to six million.

The REA’s proposed plan includes measures to reduce energy bill costs by moving ‘green’ levies into general taxation and suspending VAT on energy bills for one year. Additionally, the REA urged the government to expand the eligibility and increase the value of the Warm Homes Discount to provide extra support for those who need it.

In parallel, the Association said the government must provide ‘catalysts’ to improve the insulation of homes and drive up the installation of domestic renewables and clean technology to reduce the threat of volatile gas prices. This can be achieved by establishing an effective insulation scheme by the spring to ensure all houses have an EPC rating ‘C’ by at least 2024/25, and to remove the VAT on domestic renewables and clean technology.

Lastly, the REA has backed calls by renewable energy provider, Octopus Energy, to introduce a short-term Commercial Loan Scheme to support energy suppliers to manage elevated wholesale gas prices and protect their customers from additional costs.

“The fact that inflation has reached its highest level in nearly three decades underlines why the government needs to urgently tackle the energy bills crisis,” said Dr Nina Skorupska CBE, chief executive of the REA.

“An increasing number of households are facing a devastating choice between heating and eating, which is why the VAT on energy bills must be suspended, and why the Warm Homes Discount must be expanded, both in terms of value and eligibility.

“We also believe that, while the investment the ‘green levies’ provide has been crucial for driving the energy transition forward, it would be more appropriately sourced from general taxation, at least at the same level.

“However, while these are important short-term measures, there also needs to be a significant drive to insulate our homes and increase the installation of domestic renewables and clean technology to protect households from volatile gas prices.

“It is clear that there needs to be a combination of measures to immediately relieve pressure on the cost of living while working rapidly to insulate people against the financial burden of fossil fuels in the longer term. If the government fails to act now, the consequences for millions of people in this country will be stark.”