A German-style national drive to reduce UK energy use by turning off lights and lowering heating temperatures could save households £400 and save the Treasury £9 billion, new analysis shows today.
The Social Market Foundation, a cross-party think-tank, is calling on the Government to follow Germany’s lead and launch an information campaign that provides practical tips on reducing household energy demand.
In Germany, a national energy-saving campaign has seen lights turned off in some public buildings, heating turned down and households encouraged to minimise energy use. Since the campaign was launched in September, Germany’s gas consumption has been between 20% and 37% lower than at similar times in earlier years.
Replicating such reductions in energy use in Britain could deliver household savings of between £250-£400 a year, the SMF calculated in a new paper out today. (See Table below)
Reducing energy use would also deliver significant saving for the public finances, since the Energy Price Guarantee policy currently means that taxpayers subsidise every unit of energy used in the UK.
The Treasury could save up to £9.3bn on the price guarantee policy if British energy demand fell as much as Germany’s, the SMF estimated. That saving could reduce the scale of the spending cuts and tax rises the Treasury is preparing to announce at the Autumn Statement later this month.
The German energy saving campaign is based on provided easy options to consumers already looking to reduce demand of their own accord, and strong encouragement from national leaders to save energy.
The German government’s package of energy-saving measures includes “offering practical tips, suggestions, and examples to make saving energy as easy as possible”, and it has thus far refrained from imposing policies that force households to further reduce consumption.
Despite the strong case for demand reduction measures, the government of Liz Truss refused to launch similar campaigning efforts, because the then-prime minister did not want to be accused of “nanny state” attempts to tell people what to do.
The government of Rishi Sunak has so far not made its plans clear. The SMF said ministers should look to emulate the German programme as soon as possible. The SMF has produced estimates of what could be saved in this country by calculating the impact of both 20% and 30% demand reductions, as observed in Germany, on household finances. We found that if consumption were to fall by 20%, the average household would save around £260 across the year. If consumption fell by 30%, it would save just under £400 a year.
Jake Shepherd, Senior Researcher at Social Market Foundation, said:
“In the face of rising energy costs, and despite the Energy Price Guarantee, households are and will continue looking for ways to reduce their demand for energy. The Government should give them more practical information on doing so, instead of leaving them in the dark – or worse, making unacceptable trade-offs between heating and eating.”
“Far from ‘nannying’ people, Government guidance would empower them – and most importantly, help them save on their energy bills. Reducing energy use would deliver significant savings for the Treasury, potentially reducing the pressure on ministers to find money elsewhere with tax rises and spending cuts.”
Table: Financial impact of reduced gas demand, 2022 prices
Source: SMF analysis of BEIS energy consumption data
Notes
- The SMF paper, Cooking on gas? Estimating the potential savings of reduced household energy demand, will be published at https://www.smf.co.uk/commentary_podcasts/reduced-energy-demand-savings/ on Monday 7th October 2022.
Contact
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