Combined Heat & Power, District Heating & Cooling, Demand Side Services, Energy Efficiency

Open letter from the ADE and wider sector to cut green VAT

17 February 2022

Dear Chancellor,

 

The ADE are a trade association and leading advocate for decentralised energy and building retrofit, with a membership base of more than 150 organisations.

The undersigned organisations from both our membership and wider industry are calling for a reduction in the VAT applied to energy efficiency measures from the current rate of 20% to 0%, similar to that of new build projects. As newbuild projects have zero rated VAT applied to energy efficiency measures, it incentivises replacement of existing buildings rather than retrofitting existing structures, despite retrofitting resulting in far lower overall carbon emissions than replacement. Regardless of what policies and other incentives exist for the retrofit market, with 20% VAT on all retrofit works to existing homes, there is a strong disincentive to carry out deep retrofit works. This is a particularly critical issue considering the ongoing energy price crisis – whilst energy efficiency solutions alone cannot solve the issue of soaring energy bills, they are an effective way in which the UK can work to futureproof the warmth, health and comfort of its citizens.

The removal of VAT on energy efficiency retrofit measures would act as a major stimulus to the market with the enablement of significant reductions in carbon emissions before the fourth carbon budget. It would promote the retrofitting of existing building stock and create thousands of jobs 42,000 extra full-time equivalent construction jobs and an additional 53,000 jobs in the wider economy over five years by increasing the demand on the retrofit supply chain. It would improve the energy efficiency of the UK’s housing stock, reducing fuel costs to consumers and consequently reduce the impact on the fuel poor. Removing the VAT would also support those to retrofit their homes who currently cannot afford to do so and act as a fast turnaround, no regrets fiscal stimulus. It would also increase demand for retrofitting and thereby support the UK’s green retail finance sector by increasing lender’s confidence in consumer demand for energy efficiency.

With this in mind, we would welcome the opportunity to meet with you, at a time of your convenience, to discuss how we can support your Department in helping to make the transition to zero rated VAT and deliver on net zero compliant buildings.

 

Yours sincerely,

Lily Frencham, CEO, Association for Decentralised Energy (ADE)

Danielle Belton, Director, Saving Energy UK

Brian Berry, Chief Executive Officer, the Federation of Master Builders

Andrew Champ, Executive Director, Solid Wall Insulation Guarantee Agency (SWIGA)

Martin Clayton, Director, National Insulation Authority (NIA)

David Cowdrey, Director of External Affairs, Microgeneration Certification Scheme Charitable Foundation

Neil Cutland, Director, Cutland Consulting Ltd

Chris Davidson, Director, Genius Energy Lab/Policy Lead, Ground Source Heat Pump Association

Nigel Donohue, Chief Executive Officer, Insulation Assurance Authority (IAA)/ Chief Executive Officer, Cavity Insulation Guarantee Agency (CIGA)

Nicholas Doyle, Director, Adecoe

Nick Eyre, Professor of Energy and Climate Policy

Mark Hamilton, Managing Director (Solo Energy), SMS

Councillor Helen Hayden, Executive Member for Infrastructure and Climate at Leeds City Council

Stew Horne, Head of Policy, Energy Saving Trust

Andy King, Division Manager for Advisory and Planning, Sweco

Dan Meredith, Senior Manager (External Affairs), EON

Mervyn Piley, Executive Director, ESTA Energy Services and Technology Association (a trading division of Energy and Utilities Alliance (EUA))

David Robson, Chief Executive Officer, Instagroup

Mark Thomas, Chief Executive Officer, Communal Energy Partners

Hazel Turner, Company Secretary, Insulated Render and Cladding Association (INCA)

Liz Warren, Director, SE2 Ltd

Julian Wiley, Director, Social Energy

 

See media coverage:

Energy Live News

Edie

The Energyst

ADE Newsletter