Government announces £1.5bn insulation scheme for low-income households

The UK government has announced a new £1.5bn package to improve the energy efficiency of UK households, as the country faces a looming energy crisis. 

Under the Help to Heat scheme, around 130,000 social housing and low-income properties could see their bills reduced by around £400 to £700, the government said. 

Social housing with an Energy Performance Certificate (EPC) rating of D or lower will be eligible to receive upgrades, while the Home Upgrade Grant funding will help people who are most vulnerable to fuel poverty, living in privately owned off-gas-grid homes and on low incomes. Local authorities and social-housing providers will be able to submit bids for funding and will deliver upgrades from early next year until March 2025.

The scheme aims to reduce the likelihood of households falling into fuel property as a result of the rising energy prices, caused by the Russian invasion of Ukraine. 

“Putin’s illegal war in Ukraine would have had dire consequences on the energy bills of both households and businesses this winter without the government’s decisive action," said Business and Energy Secretary Jacob Rees-Mogg. 

Wall and loft insulation, double glazing, heat pumps and solar panels are some of the upgrades included in the package, which will be funded by the £6.6bn that was announced in 2021 as part of the government's Heat and Building Strategy.

The funding is being made available through two existing ‘Help to Heat’ schemes – the Home Upgrade Grant (HUG) and the Social Housing Decarbonisation Fund. HUG is receiving up to £700m and the remaining £800m will be allocated to the Social Housing Decarbonisation Fund.

“Today, I am cutting costs even further for the most vulnerable households for years to come," Rees-Mogg said. "By making homes warmer and cheaper to live in, we are not only transforming the lives of households across England, we are creating huge growth in the economy, backing the green energy sector and supporting thousands of high-skilled jobs.”

Currently, around 46 per cent of the UK’s housing stock is meeting EPC C or above, compared to just 9 per cent in 2008. The amount of social housing meeting this requirement has risen by 18 per cent to 66 per cent in the same timeframe, according to the government.

Business and Energy Minister Lord Callanan said: “The cheapest form of energy is the energy we do not use. Our Help to Heat schemes are already bringing real benefits to tens of thousands of low-income households across the country by improving the energy performance of their homes and saving them hundreds of pounds on their bills.”

Britain is frequently described as having some of the oldest and least energy-efficient housing in Europe and government critics have long argued that insulation, one of the simplest ways of cutting both energy consumption and bills, was being ignored.

Recently, the Institute of Public Policy Research (IPPR) devised a 28-year plan – at an annual cost of £7bn – to deliver energy-saving domestic upgrades across the UK in a bid to ease the strain on people’s wallets and the environment, that it claimed would "save the country billions".

The IPPR said that all of England’s 24 million homes need upgrading, putting the country “far behind” its European neighbours such as Germany and France.

Other industry and research organisations have also joined this call for further investment into home insulation. A business coalition, the Energy Efficiency Infrastructure Group, has urged Chancellor Kwasi Kwarteng to invest £5bn more to insulate UK buildings, while the Energy and Climate Intelligence Unit has said the government’s 2013 decision to cut support for home insulation means 10 million households have missed out on upgrades that would have cut their energy demand. 

"We know that England’s homes produce more carbon each year than the average annual use of the country’s cars, so decarbonising social homes has a pivotal role to play to meeting the country’s net-zero target," said Kate Henderson, chief executive of the National Housing Federation. 

In July 2020, the government announced a £3bn package for British homeowners to make their houses more energy efficient and improve insulation efforts. However, the Public Accounts Committee called it a “slam dunk fail” after it failed to draw applicants and was closed after less than a year.

A recent review of 32 independent studies has cast doubt on another government proposal, this time related to the use of hydrogen to heat homes. The research found that using hydrogen in domestic heating is less economic, less efficient, more resource intensive, and has a bigger environmental impact than many alternatives, including heat pumps, solar thermal panels and district heating. 

The UK is currently facing a cost-of-living crisis, with inflation hitting historic levels. In order to ease the pressure on households, new Prime Minister Liz Truss has presented a package that includes freezing energy bills at £2,500 a year average. The measure will replace the existing energy price cap set by regulator Ofgem, which was set to increase to £3,549 come October.