Helping Families and Businesses Reduce Energy Use

The UK government has allocated £6 billion to help homes and businesses improve energy efficiency and reduce costs. This support will include:

– Upgrading around 1 million homes to make them warmer and more energy efficient. This is part of a wider effort to help families transition to net zero carbon emissions.

– Providing targeted assistance to 200,000 low-income households living in poorly insulated social housing units. Upgrades will focus on improving insulation and heating to make these homes more livable.

– Adding £1.5 billion in funding to the successful Boiler Upgrade Scheme which provides grants of up to £7,500 to homeowners replacing old gas boilers with more efficient electric heat pumps.

The overall goal is to help British families and businesses cut energy use, save money on bills, and reduce carbon emissions by improving efficiency across buildings and housing.

Around a million families and hundreds of businesses will be helped to cut their energy use, backed by £6 billion, as part of the new approach to net zero that will save on costs for the public.

Families will benefit from a range of options to heat their home for less and reduce emissions through energy efficiency measures, such as insulation for around 500,000 homes and hundreds of thousands more grants for heat pumps.

The Prime Minister’s 50% increase in the heat pump grant to £7,500 has already led to a 57% increase in applications. After the success of this scheme, an additional £1.5 billion of funding will ensure more homes and businesses can install heat pumps, helping people transition easily to the modern, clean heating systems needed to become a net zero nation.

Energy Secretary Claire Coutinho said:

Cutting energy bills is my top priority. Today’s funding will help those who are most in need and keep around a million more families warm during winter.

Everyone deserves to live in a warm, energy efficient home. We have already made excellent progress with nearly 50% of properties in England now having an Energy Performance Certificate of C – up from just 14% in 2010.

This funding will help us go even further and improve 200,000 cold, low income and social homes.

Chancellor of the Exchequer Jeremy Hunt said:

Investing in energy efficiency combined with energy security, is the only way to stop ourselves being at the mercy of international gas prices, one of the main drivers of inflation.

This investment will support households and businesses across the country to make greener choices in a way that doesn’t add a burden to working people.

The huge cash boost comes on top of the £6.6 billion capital funding already committed from 2022 to 2025. It will provide extra help for up to 200,000 families who need it most, such as those in poorly-insulated, low income or social homes.

This is a significant step in the government’s commitment to help keep energy costs down for families and businesses across the UK – now and for years to come. It also builds upon excellent progress to date, with almost half of all homes in England holding an Energy Performance Certificate (EPC) of C or above, up from 14% in 2010.

Greg Jackson, CEO of Octopus Energy said:

Heat pumps are rapidly becoming cheaper and quicker to install, in more and more homes, and it’s clear this technology is the heating of the future.

Our customers love heat pumps, and we’re planning on hiring two thousand new engineers next year alone to try to meet rocketing demand. This increased certainty from government enables us to invest with confidence and will unlock cheaper, cleaner heating for the UK.

Mike Thornton, Chief Executive at Energy Saving Trust said:

Improving the energy efficiency of our homes and accelerating the electrification of heat are both vital for reducing our reliance on imported fossil fuels, achieving the UK’s net zero targets and permanently lowering people’s energy bills.

We welcome these new schemes and additional funding, which will help provide much needed incentives to encourage more people to upgrade their homes. We look forward to learning more about the detail including plans for roll out and engagement, as well as how we can help the UK government to ensure they are as successful as possible in supporting people to get the right measures into their homes.

Under new plans, all new homes and buildings will be zero-carbon ready from 2025 too, saving any further costs for families to future-proof their new home as we embrace clean heating.

The Future Homes and Buildings Standards, recently launched for consultation, will ensure new homes and buildings are fit for the future and help meet net zero ambitions. Energy-saving changes will deliver significantly lower bill costs than the vast majority of existing homes, while also reducing carbon emissions by at least 75% for all new homes compared to 2013 standards.

To improve existing homes, going beyond a manifesto commitment of £9.2 billion for energy efficiency to 2030, today’s announcement confirms the government will have committed to spend £12.6 billion by 2028. The £6 billion announced at Autumn Statement 2022 and allocated today will support tens of thousands of green jobs while helping homes, hospitals, schools and businesses to save money.

These include the following schemes, which are subject to business case approval and value for money assessments:

• the Boiler Upgrade Scheme, allocated a further £1.5 billion, to support families in England and Wales move away from gas to energy efficient, low-carbon heat pumps
• a new £400 million energy efficiency grant, launching in 2025, for households in England to make changes such as bigger radiators or better insulation
• a new local authority retrofit scheme, allocated £500 million to support up to 60,000 low-income and cold homes, including those off the gas grid, with measures such as insulation
• the Social Housing Decarbonisation Fund, allocated £1.25 billion to support up to 140,000 social homes to be insulated or retrofitted, improving energy performance and lowering bills
• the Green Heat Network Fund, allocated £485 million to help up to 60,000 homes and buildings access affordable, low carbon heating through new heat networks, reducing our use of fossil fuels and providing more reliable heating
• the Heat Network Efficiency Scheme, allocated £45 million to improve around 100 existing heat networks, in a move that will reduce bills and improve reliability
• the Industrial Energy Transformation Fund, allocated £225 million, will continue to help businesses transition to a low-carbon future

Businesses, heavy industries and public sector organisations such as schools and hospitals will also benefit from the Public Sector Decarbonisation scheme and wider industrial energy efficiency and decarbonisation support, through to 2028.

The government will also explore ways to expand heat networks to deliver more low-carbon heating to homes and businesses in England. The Heat Network Zoning Consultation will set out how heat networks will be delivered in areas where they are likely to be the cheapest low carbon option – to ensure families benefit from local, clean heat at fair prices.

Notes to editors

• The £6 billion capital funding covers 2025 to 2028. Announced at the Autumn Statement 2022, it has today been allocated to new and existing schemes.

• further detail on the design of the £400 million energy efficiency grant will be announced in due course, including the naming of the scheme
• the Great British Insulation Scheme and Energy Company Obligation (ECO) are set to help up to 700,000 families install improvements such as insulation by March 2026
• eligibility information for the Great British Insulation Scheme and ECO
• the new local authority retrofit scheme will be open to households on low incomes. It is planned to open in 2025
• £220 million of the funding for the Heat Networks Transformation Programme (HNTP) was already announced in March 2023
• the Heat Network Zoning Consultation runs until 26 February 2024
• £185 million of the funding for the Industrial Energy Transformation Fund (IETF) was announced as Phase 3 on 22 November. The rest of IETF funding is being delivered through Phase 2
• the total funding for the Heat Pump Investment Accelerator Competition remains at £30 million but £15 million of this is in 2024/2025
• the Future Homes and Buildings Standard consultation runs until 6 March 2024
• for more information on improving your home’s energy efficiency, including current government support, go to gov.uk/energy-efficient-home