Net zero
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Housing

No country for cold homes

Key considerations for the Warm Homes Plan

Zachary Leather
Zachary Leather
Jonathan Marshall
Jonathan Marshall

This briefing note assesses how the Government’s upcoming Warm Homes Plan should be shaped to meet the twin challenges of reducing energy bills while also driving decarbonisation of home heating. It outlines the need for strategic decisions on what the capital budget assigned to the plan should fund, and how these limited funds should be targeted. As such the note details how measures to reduce bills should be prioritised, the best approaches to means-testing, and what other policies the Government could consider.  

Key findings

  • The Warm Homes Plan aims to overhaul England’s housing stock, but will need to prioritise to achieve as much as possible given limited resources. 
  • Low-income households in poorly insulated homes could see their energy bills fall by £230 per year, every year – equivalent to 14 per cent of energy bills or 2 per cent of disposable incomes. 
  • Loft insulation is ten-times more cost efficient as a way of cutting bills than heat pumps, but heat pumps are the best way to reduce emissions. 
  • Government should better employ regulations to drive the uptake of low-carbon heating, leaving grant funding capacity for property upgrades that can reduce bills. 
  • Eligibility for grant funding should be tightly targeted, using incomes and assets instead of welfare or postcode eligibility, to ensure a focus on low-to-middle income households – even if this means delivery is more complicated. 

Further reading

No country for cold homes
Key considerations for the Warm Homes Plan
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Zachary Leather, Jonathan Marshall
Housing Outlook Q2 2025
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Camron Aref-Adib
Flex appeal
How to reform electricity pricing for a cleaner and cheaper energy system
·
Zachary Leather, Jonathan Marshall

https://doi.org/10.63492/emy951

Zachary Leather
Zachary Leather Economist
Jonathan Marshall
Jonathan Marshall Principal Economist