Nature decline and climate change add over £200 a year to household bills – Inside track

During the 2024 election campaign, Labour pledged that people would feel better off under their government. But, the cost of living crisis continues to weigh heavily on households, with recent reports warning that it will be particularly challenging from this spring as water and energy bills and council tax all rise, pushing budgets to the limit. Simultaneously, the chancellor’s Spring Statement announced cuts to welfare spending that will, by the government’s own figures, lead an additional 250,000 people into poverty.

Our recent YouGov polling found that 61 per cent of people are worried about paying their household bills over the next year. Strained finances are likely to force many to cut back on their spending, which could hinder the government’s economic growth mission.

There’s low awareness of the costs People are well aware that the latest wave of US tariffs are piling on economic pressures, but they are less aware that the deteriorating state of our natural environment and the worsening impacts of climate change are directly driving up their bills. Polling by YouGov for Green Alliance shows that many people have not yet grasped this. Only two in five Reform, Labour and LibDem voters, and one in three Conservative voters, think climate change and nature degradation are responsible for increasing their bills. But from higher insurance premiums to increased food prices and water bills, we have calculated that nature loss contributes an estimated extra £233 a year on average per household.

When nature is healthy, it is quietly doing a lot for us. From supporting food production to filtering the water we drink, providing water storage options and protecting our homes from floods. As nature declines, so do essential services we rely on, sending costs higher.

Flood payouts are increasing home insurance for everyone One way this hits our pockets is through soil damage. When soils are healthy, they act like a sponge, soaking up rainwater and releasing it slowly. But when soils are degraded, from overgrazing, deforestation or heavy chemical use, they lose this ability.  Instead of soaking into the ground, water runs straight into rivers and streams. This can raise flood risks further downstream as waterways quickly overflow beyond capacity. Over six million homes across England are now at risk of flooding, 38 per cent from overflowing rivers and rising sea levels. In 2024, record levels of weather damage pushed insurance payouts up to £1.2billion. According to our analysis, this has raised annual UK home insurance premiums by an average of £42 per household. Without action to restore soils and invest in more effective natural flood management, these costs are likely to keep on rising.

Natural infrastructure should be a funding priority too The government has focused its ambitions to grow the economy on new infrastructure investment. It has unhelpfully painted nature protection as at odds with these ambitions, labelling laws designed to protect the environment for local communities, as “blockers” of development. Instead, protecting against climate change and nature loss should be seen as important as infrastructure investment, and the source of economic returns. Our calculations show investment in nature is essential to reduce household bills.

Restoring nature and dealing with climate change require a broad range of strategies, but the government has a major opportunity to do both by boosting the farm support budget in the upcoming spending review. Covering 70 per cent of the UK’s land, farmers are our frontline stewards of the environment. The Environmental Land Management schemes fund farmers to support nature and farm sustainably and there is big demand by farmers to take them up. The schemes are the best way England has to support action to reduce flooding, improve water quality and safeguard food supplies into the future.

Some might argue that investing in nature comes with a too high price tag when finances are squeezed. But it is a cost effective use of limited government resources. Healthy ecosystems lead to multiple simultaneous benefits. A restored peat bog will not only reduce flood risk by efficiently storing water, even in times of heavy rain, protecting communities downstream from flooding, but is also important for storing carbon to mitigate climate change.

We have asked the government to increase its farming budget to £3.1billion in the upcoming spending review, in line with The Wildlife Trust’s analysis that current budgets are inadequate to meet the scale of nature restoration needed. Doing this would achieve several goals at once, not least helping to lift the cost burden on struggling households.