17th Jan 2012

  • £5bn lost to UK economy
  • 14m tonnes of CO2 emissions created
  • 2,500 job cuts in insulation industry

LONDON, (January 17 2012) Up to 1.5m hard-working households across the UK are due to miss out on a much-needed subsidy to insulate their homes over the next decade under the Government’s new energy-saving initiative, The Green Deal, according to a new study1.

The Government recently announced The Green Deal2, its nationwide home insulation initiative, will begin in October this year. However, unlike previous initiatives, homeowners will only receive a Government subsidy for expensive external ‘solid wall insulation’ or if they are the ‘fuel poor’3.

The news comes as Scottish Power became the last of Britain’s ‘Big Six’ energy companies – including EDF Energy, Centrica, SSE, RWE npower, and E.ON – to reduce its tariffs yesterday, which will be negated by higher energy bills if consumers cannot insulate their homes. Energy companies are also trying to help people reduce their heating bills this week through Big Energy Week4.

The Green Deal will involve immediately cutting all subsidies for cost-effective loft and cavity wall insulation that could benefit millions of hard-working households, many of which struggle to pay their heating bills, according to the independent study by Europe Economics on behalf of Knauf Insulation, one of the world’s leading providers of insulation products.

It has found up to 1.5 million households nationwide could insulate their homes and benefit from a reduction in their heating bills between 2013 and 2022 if the Government allowed the more cost-effective insulation of lofts and walls to be funded while still delivering significant numbers of external insulation. This is in addition to the 3.2 million households that are expected to do so under current subsidy proposals.

Steven Heath, External Affairs Director of Knauf Insulation, said: ‘Supporting hard-working households in this way will allow them to reduce their energy bills at a time when they need the extra cash and, in turn, allow the Government to hit its carbon reduction commitments.

It beggars belief that the Government is removing this valuable subsidy completely when it will have a dramatic impact on family finances, as well as on jobs within the insulation industry and the wider economy. Suddenly having significant funding for rarer solid wall insulation will lead to the rapid expansion of the industry without putting adequate installer training and safeguards in place. This approach by the Government is likely to have an impact on the quality of install homeowners will receive.

Removing a strong driver for insulation take up like subsidies for loft and cavity wall insulation will deprive the UK economy of £5bn over the next 10 years, according to the study. It will also result in 14m tonnes of extra CO2 emissions and the loss of 3,000 jobs in small businesses in the insulation industry over 2012-2013.


Editor’s notes:
1 The Green Deal and Energy Company Obligation, Europe Economics, December 28 2011.
3 About 25% of funding will be focussed on those in receipt of State Pension Credit, Child Tax Credit under the ‘free school meals’ income threshold or people in receipt of either Income Support, Income Related Employment and Support Allowance (where this includes a work related activity or support component), Income Based Jobseeker’s Allowance and at least one of the following:

  • parental responsibility for a child under the age of 5 who ordinarily resides with the person
  • child tax credit which includes a disability or severe disability element
  • a disabled child premium
  • a disability premium, enhanced disability premium or severe disability premium
  • a pension premium, higher pension premium or enhanced pensioner premium

4 For further information about the Big Energy Week visit