The Department for Energy Security and Net Zero and HM Treasury announced on 18 December 2023 that £6 billion of capital funding has been allocated across new and existing energy efficiency and low-carbon heating schemes, covering 2025 to 20281. The department said the funding would make around a million homes warmer and support hundreds of businesses1.
The largest single allocation is £1.545 billion for the Boiler Upgrade Scheme, which supports households in England and Wales moving from gas to heat pumps1. The department said the £7,500 heat pump grant had already led to a 57 per cent increase in applications, and that the additional funding would let more homes and businesses install heat pumps1. A new £400 million energy efficiency grant for households in England, covering measures such as bigger radiators or better insulation, launches in 2025; the department said further detail on its design, including the scheme's name, would be announced in due course1.
Other allocations include £500 million for a new local authority retrofit scheme supporting up to 60,000 low-income and cold homes, including those off the gas grid, and £1.253 billion for the Social Housing Decarbonisation Fund, supporting up to 140,000 social homes1. The Heat Network Transformation Programme receives £530 million, the Public Sector Decarbonisation Scheme £1.17 billion, the Industrial Energy Transformation Fund £225 million, and a further £410 million goes to industrial energy efficiency and decarbonisation, with details to be announced1. The department said the schemes are subject to business case approval and value for money assessments1.
"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."
The department said the £6 billion was announced at the Autumn Statement 2022 and has now been allocated, and that total committed spending on energy efficiency will reach £12.6 billion by 2028, against a manifesto commitment of £9.2 billion to 20301. It also said the Great British Insulation Scheme and the Energy Company Obligation are set to help up to 700,000 families install improvements such as insulation by March 20261.
| Scheme | Allocation | Funding years |
|---|---|---|
| Boiler Upgrade Scheme | £1.545bn | 2025/26 to 2027/28 |
| Heat Pump Investment Accelerator | £15m | 2025/26 |
| £400m energy efficiency grant | £400m | 2025/26 to 2027/28 |
| Local authority retrofit scheme | £500m | 2025/26 to 2027/28 |
| Social Housing Decarbonisation Fund | £1.253bn | 2025/26 to 2027/28 |
| Heat Network Transformation Programme | £530m | 2025/26 to 2027/28 |
| Public Sector Decarbonisation Scheme | £1.17bn | 2025/26 to 2027/28 |
| Industrial Energy Transformation Fund | £225m | 2025/26 to 2027/28 |
| Industrial energy efficiency and decarbonisation | £410m | 2025/26 to 2027/28 |
Why it matters for households
The money is capital funding for schemes rather than direct payments to households, so what a home can actually get depends on which scheme it falls under and whether it meets eligibility rules. The Boiler Upgrade Scheme is the route most owner-occupiers in England and Wales will recognise, and its allocation runs to 2027/28, which gives the grant a longer confirmed runway than before. The £400 million grant and the local authority retrofit scheme are both new and aimed at England; the retrofit scheme is open to households on low incomes and is planned to open in 20251. For homes off the gas grid, the retrofit scheme explicitly includes them1.
For a household weighing up insulation, a heat pump or both, the practical effect is that several funding streams now have money attached to specific years rather than headline announcements. The department has not published eligibility detail for the £400 million grant, and has said the naming of the scheme will come later1. Whether a home qualifies for the Boiler Upgrade Scheme can turn on its EPC and existing heating; the gas boiler eligibility and EPC insulation rules sit alongside the funding itself. Households comparing grant routes may also look at how the Boiler Upgrade Scheme sits against ECO4, which continues separately.
What happens next
The Heat Network Zoning Consultation runs until 26 February 2024, and the Future Homes and Buildings Standard consultation runs until 6 March 20241. The new local authority retrofit scheme is planned to open in 2025, and the £400 million energy efficiency grant launches in 2025, with design detail to be announced in due course1. The department said all schemes are subject to business case approval and value for money assessments1.