This winter, Britain is on course for a cost of living squeeze. The Resolution Foundation suggests that soaring energy bills, high inflation and the end of Covid relief measures means that millions of households will be £300 worse off in the next three months, and £1,000 worse off next year.
With 90 per cent of Britons expecting the cost of living to rise over the next three years, alarm bells should be ringing in the Conservative Party over the finances of their new voters in the Red Wall.
The Treasury will also be concerned about its expenditure, but it shouldn’t see this as a choice between tackling the cost of living and investment in net zero. Green policies, especially in transport, home energy and resource efficiency, are capable of saving money both for households and the exchequer.
The spending review this week is quite possibly the last chance to deliver on the UK’s 2030 climate target to cut carbon emissions by 68 per cent. How Rishi Sunak delivers on the government’s net zero goal amidst the cost of living crisis will mark a crucial moment in his chancellorship. No pressure.
Decoupling ourselves from petrol and diesel
The long queues and high prices at petrol stations, caused by a shortage of HGV drivers, has forced motorists to reconsider their relationship with fossil-fuelled vehicles.
Considering that 68% of all journeys are under five miles, we could curb our diesel and petrol use through investment in safe, efficient and affordable public transport and better walking and cycling infrastructure.
The recently published Net Zero Strategy is highly ambitious, with a goal of “half of journeys in towns and cities to be cycled or walked by 2030”. The missing piece in the puzzle, though, is the scale of investment. To improve the provision of sustainable public and active transport infrastructure across the UK, especially in rural areas, the Green Alliance estimate that an additional £2.3 billion a year is required over the spending review period.
Delivering warmer homes for all
Britain’s poorly insulated housing stock has left families exposed to the recent gas price spike. It was positive, therefore, to see the Heat and Building Strategy lean on a ‘fabric first’ approach – that is, upgrading the insulation of homes first before the heating system. Green Alliance research shows that basic energy efficiency improvements can produce significant energy bill savings, such as loft insulation (£180) and external solid wall insulation (£490).
Despite good intentions, it is clear the Treasury has trimmed its funding on home energy efficiency. Estimates by E3G suggest spending is £4.35 billion short of the government’s own manifesto commitments and £9.75 billion short of what is needed to get on track to net zero.
Investing in retrofitting programmes, and incentivising retrofitting through bringing VAT on renovation in line with zero rate VAT on new builds, will save households money on their energy bills and stimulate job creation.
Improving resource efficiency
Recent supply chain issues have driven up costs for consumers and businesses alike. Preventing avoidable waste and keeping products and resources in use for as long as possible can reduce these costs and improve the UK’s resource security.
Take a smartphone, for example. A phone costing nearly £600 new will retain less than half of its original value when reused (£290) or sold as parts (£188), but loses almost all of its value when shredded, with materials worth just £1.50. Improving the durability and repairability of phones, and creating a higher-quality second hand market in the process, will save consumers money. Keeping valuable parts in circulation for longer will also reduce the UK’s reliance on imports, reducing business costs.
To bring down costs and ensure security of supply, the spending review should set an ambitious economy wide target to reduce resource use by 50 per cent by 2050, with separate targets and plans for high impact sectors and strategic materials – such as cobalt and lithium, which are commonly used in the electronics sector for smartphones.
The spending review this week represents a key moment to seize the huge opportunities of net zero. Not only is early investment in net zero the best option for government finances, as the Office for Budget Responsibility tells us, but it can alleviate rising living costs, ushering in an early spring.
The author is James Fotherby, policy adviser at Green Alliance.