Recently, the government set out the details of the highly anticipated Warm Homes Plan. With a raft of measures to support fuel poor and low-income households, finance options for low and no interest loans and a relaxing of the fabric first approach to government retrofit schemes, the announcement has been met with general positivity across the sector.
Beyond what had long been expected – an updated approach to delivering efficiency improvements for low-income households – the plan also announced the creation of the Warm Homes Agency. This new body will bring together functions currently carried out by Salix, OFGEM and DESNEZ to support consumers through the range of retrofit options available to them.
The announcement of the governments support for low and no interest loans to cover the upfront costs of installations is an exciting development. For energy advisors, this new mechanism will open options for a whole new slice of clients sitting between low-income, grant eligible clients and the able to pay market. Typically, these clients slipped between the cracks of traditional energy advice options, but these new loan mechanisms have the potential to change this. This all depends on how these options are rolled out, and how accessible they are – all details we are yet to see.
With the recent ECO4 insulation scandal barely behind us, and the UK governments track record of delivering grant schemes with complicated rules and low engagement, the question of effective roll-out and delivery is front and centre. The announcement of the Warm Homes Agency, and the Heat Training Grant give an indication that perhaps some lessons have been learned from previous schemes. The plan also provides details on certification requirements for installers and a redress scheme for poorly done or damaging work.
A lack of clear, reliable options for consumers and a failure to address the retrofit skills gap will doom this scheme to becoming another failed attempt to address the UK’s leaky homes. It is also vital that the government makes noise about these new standards to increase consumer confidence in domestic retrofit options.
A true missing piece of the puzzle is the unclear roadmap towards rebalancing policy costs to reduce the cost of electricity for consumers. Whilst the Autumn budget has promised to move the ‘Green Levy’ to general taxation from April 2026, there is still further policy cost rebalancing available to remove the artificial inflation of electricity prices. This would further reduce the cost of electricity and unlock the benefits of heat electrification for even more households.
Overall, however, the government have announced a thorough plan which appears to have learned lessons from past schemes and taken the concerns of the sector seriously.
Key Highlights:
- £4.4 billion in direct grants for low-income households
- £2 billion in low-interest loans to cover upfront costs
- Landlords must ensure their properties are at EPC C by 2030
- Expanded Boiler Upgrade Scheme to include air-to-air heat pumps
- Founding of the Warm Homes Agency to support consumers through available schemes
- The availability of the combination of grant and personal finance options (i.e. Boiler Upgrade Scheme + finance option = almost no upfront cost for a heat pump)