The UK Government has announced £1.8 billion in funding to improve energy efficiency in residential properties as part of its Warm Homes Scheme. The funding will be used to retrofit up to 170,000 homes across England, improving their energy efficiency, reducing bills, and cutting emissions. The funding announcement follows the launch of the Warm Homes Plan late last year by the Department for Energy Security and Net-Zero (DESNZ).
The bulk of this will go towards social housing, with £1.29 billion having be earmarked for 144 projects throughout England[i]. The remaining £500 million will be disbursed to local authorities over the course of the next three years as part of the Warm Homes: Local Grant. It will benefit households which are low-income, have an Energy Performance Certificate (EPC) between D and G, and are privately owned (owner occupied or privately rented)[ii]. Examples of measures which could be added using the scheme include insulation, solar panels, and air source heat pumps (if suitable).
Minister for Energy Consumers, Miatta Fahnbulleh, has said: “Living in a warm, comfortable home should not be a luxury. It is a right that has been out of reach for too many people for too long. By giving this funding to local authorities and social housing providers we are delivering on our promise to improve the homes of thousands of people across England.
She adds: “As part of our Plan for Change, we are powering on with our Warm Homes Plan, upgrading cold and draughty homes so they are warmer, cleaner, and cheaper to live in”[iii].
The Warm Homes funding announcement comes just weeks after UK regulator Ofgem announced that the energy price cap will set to rise by 6.4% from 1st April 2025. It means that the average household bill for dual fuel (electricity & gas) will now be £1,849 per year ($2,340), up by £111 ($141) when compared with the previous price cap[iv]. Ofgem places blame on a recent spike in wholesale prices as the main driver of the rise, with this accounting for around 78% of the total increase. They state that a small increase in policy costs and associated inflationary pressures make up the remaining 22%.
The energy price cap is the maximum amount that energy suppliers can charge consumers for each unit of gas or electricity they use, as well as the standing charge if on a standard variable tariff. The rise in the price cap follows a warning from the ECC (Energy Crisis Commission) late last year, in which it raised concerns that the UK remains vulnerable to a future energy crisis, largely because the nation relies so heavily on imported gas. The result of the last crisis is an estimated 7.5 million UK homes in fuel poverty, and energy debts nearing £3.5 billion collectively, according to the ECC
Consumers are keen to take action to combat these price increases, with new data from Santander finding that over half (52%) of UK residents now view improving the energy efficiency of their home as a priority, up from 37% in 2023. Yet, the ‘Tomorrow’s Homes’ report finds major barriers that are preventing consumers from acting. For example, almost one in six (57%) respondents said that the upfront costs of making home energy improvements was a barrier to taking action, and more than two thirds (69%) said that they know little to nothing of the government schemes to incentivise home energy improvements. Further, 65% claimed they knew little to nothing about the financial products available to finance energy efficiency improvements.
Fiona Hyde, Head of Sustainability at Santander, said:
"It’s really encouraging to see how many more UK residents are considering the benefits of energy-efficient homes. With the Government target to upgrade 5 million homes by the end of this Parliament, the Warm Homes Plan presents a prime opportunity to address homeowners’ concerns and incentivise action. Finding new ways to tackle both the financial barriers and the lack of knowledge around home energy efficiency improvements, will hopefully mark the turning point for us seeing homebuyer appetite result in action.”[v]
Notably, the UK has some of the oldest and least energy efficient housing stock in Europe, and prior to the Government’s latest Warm Homes announcement, the Building Research Establishment (BRE) called on the Government to do more to support the UK’s coldest homes.
In an article for Politics Home, Jane Goddard, Deputy Chief Executive Officer at BRE suggests that focus should be on dwellings with the lowest ratings[vi]. Data from the government’s English Housing Survey 2023-24 finds that the number of dwellings that are in the bottom energy-efficient EPC categories – in the EPC E, F and G bandings – has fallen to 9 %. Yet the government’s ‘Review of the Fuel Poverty Strategy: Consultation’ document states that “the number of fuel poor households in Band F and G, has stayed at 5.9%” since 2014.
These E to G banded homes are typically under-insulated. They're more likely to be older, larger and in rural areas, and they often rely on oil or direct electric heating. Based on 2022 data, the English Housing Survey estimates that energy bills can be twice as high for E, F and G homes as those in the A to C bands[vii].
Source: BRE
While they account for less than one in 10 residential properties, residents living in these homes in 2023 constituted one in five (20 per cent) of fuel-poor households, accounting for 55% of the £1.3bn national fuel poverty. Further, in the lowest rated F and G banded homes, there can be serious health hazards to cardiac and respiratory health caused by cold and damp conditions. BRE's previous research in 2023 estimated that this could be costing the NHS (National Health Service) over £500m a year[viii].
[ii] Warm Homes: Local Grant – successful local authorities - GOV.UK
[iii] Up to 170,000 homes to get energy saving upgrades - GOV.UK
[vi] The Warm Homes Plan: a path to energy efficiency and net-zero goals
[vii] Ibid
[viii] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
