Warm Homes Plan: gutting funding could see families paying up to £500 extra in bills every year

Over the rest of this Parliament, households could spend more than £2 billion extra if the pace of upgrades is slow as a result of scaling back the government’s manifesto pledge which is to fund 5 million home upgrades.

If no more ambition for the Warm Homes Plan is unveiled at the Spending Review, only 300,000 homes may be upgraded which means ultimately, by the end of this Parliament, 4.7 million households may miss out on upgrades that would have saved them an average of around £300 per year, if energy prices remain at current levels, a total of £1.4 billion annually. 

Older, vulnerable and low income households tend to live in the least efficient homes. For example, those living in homes at Energy Performance Certificate (EPC) band F could miss out on close to £500 worth of annual energy bill savings, compared to £175 in an EPC band D home. Over the rest of this Parliament, a household that misses out on upgrades could fork out a total of nearly £1,500 extra on bills.

Commenting on the analysis, Jess Ralston, Energy Analyst at the ECIU said:

“One ofthe reasons British households were hit so badly when Putin started the gas crisis is that we have millions of old, draughty homes.

“We spent literally billions of taxpayers’ money subsidising bills because we have to burn so much more gas to keep homes warm as the heat is wasted, leaking out through roofs, walls and windows.

“Expanding the Warm Homes Discount might well be a lifeline for many this winter but it is unfortunately treating the symptom of expensive energy bills without tackling the root cause, which is over-reliance on gas and leaky homes.  

“Successive governments over decades have broken promises, cutting investment, causing local energy efficiency businesses to shutter, leaving the poorest in the worst homes and the UK more dependent on foreign gas.” 

Given the savings that could be achieved from insulating homes, the Government investment could be paid back in less than a decade through lower bills.

Pre-Election, the Labour party committed to upgrading 19 million homes as part of the Warm Homes Plan, backed by a wider funding package of £28 billion. However, this was scaled down to 5 million homes funded by £13.2 billion, double the last Conservative Government’s pledged investment, in the Manifesto.

Ahead of the Spending Review, there has been speculation that the Warm Homes Plan will be cut further. If the Government does not invest more beyond the £3.4 billion funding for upgrading 300,000 homes announced in November 2024, the policy may reach 98% fewer households than the 19 million originally pledged.

Not only this, but the equivalent of an extra 40 LNG tankers worth of gas would be required each year for heating these 19 million homes before they are upgraded – plus further gas for their electricity supply unless more renewables are deployed each year.  As the North Sea continues its inevitable decline, industry forecasts show that natural gas is increasingly going to come from abroad.