City Council Leader Welcomes VAT Support for Household Energy Efficiency and Generation

Gloucester City Council Leader, Councillor Richard Cook, today welcomed this week’s announcement that VAT will be removed from home energy-saving measures such as insulation, solar panels, and heat pumps.

The decision follows requests from Gloucester City Council and a wide range of stakeholders to zero-rate energy efficiency measures in or to reduce the impact of energy prices on households and reduce the nation’s greenhouse gas emissions.  

In December 2021, Cllr Cook wrote to the government to emphasise that VAT shouldn’t apply to energy-saving products and it could put off homeowners and landlords who wished to reduce their carbon footprint and reduce costs for themselves and their tenants, as well discouraging them from upgrading their properties.

The built environment is responsible for 40 percent of U.K domestic emissions and represents both a significant threat to the country’s ambitious decarbonisation targets and one of its largest potential sources of emissions reductions and opportunities to reduce resource depletion and fuel poverty.

Councillor Cook said: “The National Infrastructure Commission estimates that we need to deliver over 21 million individual heat energy efficiency measures to buildings in England by 2035. This includes insulating ten million lofts, six million floors, and almost 45 million walls.

“Yesterday’s announcement by the Chancellor on reducing VAT to zero on home energy efficiency and generation products is hugely welcome and will undoubtedly encourage Gloucester’s landlords and householders to invest measures that will not only save money and carbon, but also generate demand for the skills of Gloucester’s small and medium-sized business.

“However, while it is positive to see the Treasury recognise, the environmental, financial, and – in light of the destabilising impacts on energy markets of the invasion of Ukraine – national resilience benefits of home energy efficiency, there is more work to do.

“In my December 2021 letter to the Chancellor, I also noted that by applying VAT to building renovation projects, but charging 0% VAT on new build property, it promotes unsustainable and often unnecessary demolition and rebuild of housing rather than the low-carbon ‘retrofit’ culture that we require.

“I will now be writing to the Chancellor again to welcome the positive steps taken and reiterate that the Treasury needs to go further and apply full VAT relief to low-carbon building renovations if the Government is to meet its stretching and absolutely necessary Net Zero emission targets.”