The government allocated £3.4 billion to the Warm Homes Plan in the Autumn Budget, including £1.8 billion to support fuel poverty schemes, and introduced tax incentives to encourage the purchase of electric vehicles1. The government described the £3.4 billion as an "initial" commitment1. The Budget also included further funding for the Boiler Upgrade Scheme2.
The Warm Homes Plan is intended to upgrade the UK's housing stock, with a target of retrofitting five million homes over this parliament, backed by £13.2 billion in funding3. Energy UK reported that the government published the first major step in the Plan in November 2024, with ambitions that up to 300,000 homes will benefit from upgrades next year, and that the Autumn Budget announcement of £3.4 billion was "primarily a reiteration of spending that was committed by the then-Chancellor Jeremy Hunt in the 2023 Autumn Statement"4. Energy Saving Trust stated that the £3.4 billion was allocated in the 2024 Autumn Budget3.
Which? reported that 71 per cent of homeowners who knew what heat pumps were said they were too expensive to install, and that the median price for installing an air source heat pump is just under £13,000, according to data collected from installers under the Boiler Upgrade Scheme, with the grant lowering the overall cost by £7,5001. The average cost of installing a standard combi boiler is £2,5971. Just two per cent of homeowners own a heat pump and 55 per cent are aware of what they are; of those, 54 per cent said they would not consider installing one1. From January to July 2024, more than 30,000 heat pumps were installed in homes and small businesses across the UK, a 45 per cent increase on the same period in 2023, according to MCS1.
Mitsubishi Electric reported that 79 per cent of homeowners use a gas boiler and just 4 per cent use an air source heat pump, with 73 per cent saying they do not know enough about low-carbon heating options to make an informed decision2. It also reported that applications to the Boiler Upgrade Scheme more than doubled in April 2024 compared with the same month in 2023, since grants increased from £5,000 to £7,500, and that uptake in September 2024 was 12 per cent higher than in August 20242.
"In the recent budget, the government allocated £3.4 billion to the Warm Homes Plan, including £1.8bn to support fuel poverty schemes"
Why it matters for households
The funding sits behind a plan whose detail is still limited. Energy Saving Trust stated that detail is still lacking on how most of the funding will be spent, as well as progress on policies that will incentivise people to upgrade their homes3. Energy UK wrote that there are "more questions than answers about what the Warm Homes Plan will look like in practice"4. For a household weighing up home energy grants and schemes, the practical effect is that the money announced does not by itself change what is available at the door today.
The cost gap between technologies is the central figure. A heat pump installation at a median of just under £13,000, reduced by a £7,500 grant, still sits well above the £2,597 average for a combi boiler1. On running costs, Mitsubishi Electric called for electricity and gas price parity, and cited research that decoupling the price of electricity generated from renewables from natural gas prices would have saved the average household £131 on its energy bill in 2022, equating to 15 per cent of the average bill, rising to £178 if onshore wind generation was doubled2.
Energy UK noted that the UK has roughly halved its emissions since 1990, but that buildings are responsible for around a quarter of total emissions, and that there were less than half the number of heat pumps installed in 2023 than were needed to keep the UK on a pathway to net zero4. It added that in the four years since 2020, 190,000 fewer heat pumps have been installed than required4. Energy Saving Trust stated that the UK has one of the oldest and leakiest housing stocks in Europe, and that National Energy Action estimates those in fuel poverty pay up to £417 more per year for energy due to inefficient homes3.
What happens next
Energy UK reported widespread expectation that the Spending Review in late spring will provide more clarity about the funding available and the types of capital schemes the government will use4. It also called for clarity as soon as possible on the post-2026 arrangements for the Energy Company Obligation, the longest running fuel poverty scheme in Great Britain, to avoid a hiatus in delivery4. Energy Saving Trust stated that the government must commit to investing the full £13.2 billion promised in the manifesto3.
Sources4 cited
- Government must do more to tackle cost and other barriers discouraging consumers from switching to heat pumps and electric vehicles, Which? says - Which?, which.co.uk
- [](https://les.mitsubishielectric.co.uk/latest-news/8-out-of-10-homeowners-still-using-gas-while-73-unaware-of-low-carbon-alternatives), les.mitsubishielectric.co.uk
- What the UK needs to get the Warm Homes Plan right - Energy Saving Trust, energysavingtrust.org.uk
- Putting people first in a Warm Homes Plan - Energy UK, energy-uk.org.uk