Analysis: poor quality homes still £550 worse off, even with energy price drop

Energy bills are still set to remain around 50% above pre-energy crisis levels and homes with an Energy Performance Certificate of band F will still be paying £550 more [2] on their annual dual fuel bill than an EPC C house, which is the Government’s stated target for most homes. 

This is split between higher gas bills of around £270, due to for example poor insulation and energy efficiency, and higher electricity bills of £280 from inefficient lighting and appliances.  

The average home in the UK is rated EPC band D, which will see bills around £200 higher than EPC band C, split between £125 extra on gas, and £75 extra on electricity. The extra energy costs for inefficient homes would have been even higher, except that energy demand since 2021 has been suppressed as households have cut back on energy use in response to higher prices. 

The analysis comes on the same day that more than 50 senior figures from ‘socially-focused charities, green campaign groups and housing organisations’ have written to the Treasury urging it to stick to its pledged insulation programme [3], the Warm Homes Plan, in the Spending Review to ensure insulation is fitted in the homes of older and vulnerable people, and those on a low income. 

Commenting on the analysis, Jess Ralston, Energy Analyst at the ECIU said: “Widening eligibility of the Winter Fuel Payment could mean help for those struggling most this year, but this is treating the symptoms rather than the root cause which is colder, damper homes having to burn more gas trying to stay warm. The poor state of the UK’s housing is a problem particularly for those earning the least who are even more at the mercy of volatile gas prices and the foreign actors like Putin who manipulate them. 

“Even with a slight fall in energy prices, the difference for a cold, damp home and an insulated, efficient one is hundreds of pounds. The Government has already delayed higher standards for privately rented homes, but any further delays to the Warm Homes Plan insulation schemes could mean billpayers and taxpayers continue to be on the hook, subsidising the bills of UK homes that are simply leaking heat. Chronic under-investment into insulating homes has contributed to the UK spending £140bn on gas over the crisis. This is the cost of ‘not zero’.” 

Following years of delay, last year the new Government further delayed new energy standards for rental properties by two years to 2030 [4], meaning more renters will be left paying higher energy bills. Private rented homes are generally among the most poorly insulated [5]. 

Before the election, the Government committed to insulating 19 million homes through its Warm Homes Plan [6], however this has already been dropped to 5 million [7] and there are concerns that the policy will be further scaled back in the Comprehensive Spending Review [8]. 

Cold, damp homes are responsible for making people ill, for example through increased respiratory and cardiovascular diseases [9], which adds to the pressures on the NHS, with the Buildings Research Establishment estimating this costs it £1.5bn a year [10]. 

Notes to editors:
 

[1] Ofgem, Changes to energy price cap between 1 July and 30 September 2025 

[2] ECIU analysis uses prices under Ofgem’s price cap for Q3 2025 and applies these prices to a whole year’s demand at Typical Domestic Consumption Values (TDCV) and for median demand at different EPC bands, according to the DESNZ National Energy Efficiency Database.  Analysis based on prices for Q3 is illustrative of costs for the year, on the assumption of prices not varying much in the three other price caps over the coming 12months.  

[3] The Guardian, https://www.theguardian.com/politics/2025/may/27/dont-cut-132bn-warm-homes-pledge-over-winter-fuel-payments-labour-told 

[4] HM Government, Improving the energy performance of privately rented homes 

[5] HM Government, Improving the energy performance of privately rented homes 

[6] Labour, Warm Homes Scheme 

[7] Hansard, Warm Homes Plan  

[8] The Financial Times, Thousands of jobs at risk if UK cuts home insulation fund, businesses warn  

[9] The Institute of Health Equity, Left Out in the Cold; The Hidden Costs of Cold Homes (2024) 

[10] End Fuel Poverty Coalition, Cold damp homes cost to NHS estimated as energy price cap rises 

For more information or for interview requests:

Jess Ralston, Head of Energy, ECIU, Tel: +44 (0)7972 548503 , email: jess.ralston@eciu.net