Nesta responds to the Budget
www.nesta.org.uk/press-release/nesta-responds-to-the-budget/
www.nesta.org.uk/press-release/nesta-responds-to-the-budget/
London, UK - The research and innovation foundation Nesta has responded to the Budget announced by the Chancellor today, including the removal of the gas standing charge on energy bills - which the organisation called for in July, extending the removal of VAT from electricity bills to July 2027 and £100 household energy payments to millions of households.
The Budget also reduced funding for the Boiler Upgrade Scheme (BUS) that provides grants for low-carbon home heating installations. Nesta estimates that this could mean tens of thousands fewer people are able to access support to install low-carbon heating, such as heat pumps, up to 2030.
Madeleine Gabriel, director of sustainable future at Nesta, said: “In the face of a growing energy crisis caused by the rising cost of fossil fuels, the government has rightly got on the front foot with measures to reduce energy bills now and in the future. Direct energy payments and extending the removal of VAT on electricity will provide millions of households with a bigger cushion against the financial drain of a difficult winter.
“To bring down our reliance on fossil fuels in the long term, removing the gas standing charge is the right first step, while a commitment to remove levies on electricity bills could finally stop people being penalised unfairly for switching away from gas heating. Electrification of heating, including getting people to switch to heat pumps, is our best long-term shield against rising gas prices because it reduces the UK’s reliance on imported fossil fuels.
“Despite these positive measures, reduced funding for the grant scheme for heat pumps could mean tens of thousands fewer people are able to access support to install low-carbon heating over the coming years. To give families lasting protection from international market shocks, the government should focus on measures that spread energy costs fairly and continue to lower electricity prices relative to gas. Removing levies from electricity bills will be the most impactful approach, while government could go further by fixing a floor and ceiling on gas prices.”
Nesta proposed abolishing the gas standing charge in the summer, finding that doing so would save the typical dual fuel household £27 per year, while costing the Treasury nothing. Nesta estimates that 86% of the poorest households would be better off with the gas standing charge abolished.
Nesta has recommended moving levies on electricity bills and onto general taxation since before the 2024 election, including in its 2023 report A policy plan for decarbonising home heating. Nesta is also proposing the government introduce a floor and ceiling for gas prices, through a gas price stabiliser policy.
Notes to editors
About Nesta
Nesta is a research and innovation foundation that designs, tests and scales solutions for the biggest challenges of our time.
Driven by a vision to improve the lives of millions of people, our focus up to 2030 is on three missions: breaking the link between family background and life chances, halving obesity and cutting household carbon emissions.
We work with partners to develop high-potential solutions and test them as they evolve, drawing on expertise in qualitative and quantitative research, data science, behavioural science and design.
Once confident in the effectiveness of a solution, we take it to scale. We create national policy proposals, develop consumer-facing products and services, build and spin out commercial ventures and harness the power of the arts.
We work with two specialised units: BIT applies a deep understanding of human behaviour to help clients achieve their goals. Challenge Works designs and runs challenge prizes to spark innovation in science, technology and society. Find out more at nesta.org.uk
