Changes in family spending – which Westminster’s Climate Change Committee (CCC) forecast will ultimately save the average household £1,080 a year in 2050 – will be the key to the next phase in Britain’s decarbonisation drive, but policy must ensure these gains are shared with poorer families, the Resolution Foundation said this week.
The CCC’s Seventh Carbon Budget shows that households cannot continue spending in the same way, with close to half of emissions reductions needed by 2040 made by changes to spending on surface transport (27 per cent), home upgrades (14 per cent), and flying (5 per cent).
The scenarios set out show that these changes should benefit families in the form of net savings in every year from 2026. The Foundation calculates that by 2050, the poorest fifth of households could see the share of their spending that goes on energy bills and driving cut by 6 percentage points.
But while the net zero transition will bring savings overall, there are also costs to switching to new technologies, particularly heat pumps, which the CCC estimate will still cost three times more a year than a gas boiler in 2050. And without government support, high upfront costs risk locking lower-income families out of the future savings that net zero will bring.
The Foundation notes that the poorest fifth of households currently have only 9 per cent of electric vehicles, while over the past decade heat pumps were more than twice as likely to be installed in the richest neighbourhoods than the poorest ones.
A successful net zero transition must ensure the costs and benefits are spread fairly. The CCC analysis suggests that a household without a car in the lowest-income quintile would save nothing, while a richer car owning household would see average benefits of £1,400 a year.
The Government should therefore look at ways of smoothing the transition by helping poorer families with the additional costs of heat pump installation and by designing fair alternatives to taxes like Fuel Duty.
Zachary Leather, Economist at the Resolution Foundation, said: “The CCC’s report highlights how the next phase of Britain’s decarbonisation drive will directly affect families’ day-to-day lives.
“While politicians fret and argue about the cost of net zero, today’s report shows that there are long-term benefits for consumers and the environment.
“But the high upfront costs of net zero technologies like EVs and heat pumps risk locking lower-income households out of the savings that they bring in the long run.
“A successful transition will require Government to get serious about supporting lower-income households in accessing heat pumps and EVs.”
