The £13.2bn of funding for the Warm Homes Plan was originally promised as part of the Labour government’s manifesto. Reeves confirmed the full funding as part of the government’s five-year Spending Review, which outlines commitments across the energy, transport, industry, health and defence sectors.

The Warm Homes Plan will ‘cut fuel poverty’ and get the country ‘back on track to meet climate targets’ says the government. It aims to do this through measures such as grants and low-interest loans for energy efficiency upgrades such as installing insulation, heat pumps and solar panels. A first wave of measures was announced in August last year. This included a boost to the Boiler Upgrade Scheme home heat pump grant, removal of the need for planning permission to install a heat pump, and a reiterated commitment to increase energy efficiency standards for all rented homes by 2030. A full rollout of the scheme is expected this autumn.

The funding was welcomed by industry associations and campaigners, who had been concerned following last year’s Autumn Statement which committed only £3.4bn to heat decarbonisation and household energy efficiency through 2028.

Stew Horne, Group Head of Sector Intelligence and External Affairs, Energy Savings Trust said: ‘This is an opportunity for the UK government to put right years of disjointed policies around home energy upgrades. We must now see a joined-up roadmap for a large-scale roll out of home upgrades to make them warmer, permanently reduce energy bills and create skilled jobs across the country.’  

Caroline Bragg, Chief Executive of the Association for Decentralised Energy (ADE) added: ‘This funding is a tectonic shift, proof the UK is betting big on clean energy. Now we must ensure every pound we invest goes towards slashing bills. The Warm Homes Plan must harness waste heat from factories to warm communities through heat.’ The ADE estimates that harnessing surplus heat from industry through heat networks could warm towns at 40% lower cost than other low-carbon alternatives.’

Yselkla Farmer, CEO of BEAMA, the UK manufacturing trade association for the electrotechnical sector noted: ‘BEAMA’s research shows we could unlock up to 10 GW of thermal storage flexibility by 2030, which both NESO [National Energy System Operator] and the CCC [Climate Change Committee] have stressed is crucial for the UK to meet its clean power targets and seize the economic opportunity that comes with it. This means there is huge potential for setting up the electrification of heat and hot water for success, but a lot still depends on how these target funds and incentives are deployed.’

Warm homes retrofit failures criticised in Parliamentary report

Meanwhile, in a report to Parliament last month, the UK Energy Security and Net Zero Committee suggested that ‘poorly designed retrofit schemes, a skills crisis and costly assurance failures’ had ‘significantly set back efforts to decarbonise home heating and bring down energy bills’ and ‘pushed the UK’s clean, secure energy targets further off track’.

The Committee is calling for a national Warm Homes Advice Service, saying that ‘a tailored service signposting consumers to advice, certified installers and financial support could give a return of £15 for every £1 spent on it’.

According to the report, four in five homes that will be occupied in 2050 have already been built and most will need retrofitting with low-carbon heating systems and energy efficiency improvements for the UK to achieve net zero emissions. ‘That’s 29 million homes that need retrofitting by 2050 to achieve the government’s emission reduction targets,’ it says.

Upgrading all homes to at least Energy Performance Certificate (EPC) level C would deliver £40bn in economic benefits in the next five years alone, and up to £100bn in further benefits over the following decade, according to the report. It would also make homes warmer, healthier and potentially cheaper to heat, reducing levels of cold-related illnesses and mental health conditions and potentially saving the NHS £2bn by 2030.

However, the Committee claims that: ‘Today there are 98% fewer energy efficiency measures being installed in homes compared to the trajectory the UK was on in 2010.’

The Committee says key to restoring consumer confidence is to deliver on the promise to bring down the cost of electricity relative to gas, with reducing the proportion of energy policy costs levied on electricity bills the most immediate and simple way to achieve that.

It says that right now, the typical household pays roughly the same amount for gas as electricity, despite using four times more gas. ‘While this rebalancing must be done sensitively to accommodate those remaining on the gas network, many of the poorest consumers, using direct electric heating, would benefit most from this change,’ it notes.

The Committee also said that while compiling its report it had heard direct from people who had suffered poor quality retrofit in their homes. As a result, it is calling for a national workforce accreditation scheme ‘to ensure people who do take the steps to upgrade their homes know who they can trust and do not instead face remediation works’.

The Committee has also questioned whether Energy Performance Certificates (EPCs) are fit for purpose. It says they do not support decarbonisation, noting that as the EPCs are based on the costs of heating a home rather than its carbon footprint, they often recommend consumers install a new gas boiler rather than a heat pump. It is therefore calling for ‘the EPC metric to be reformed to account for both home heating costs and emissions’.