The Resolution Foundation published research on 7 August 2025 arguing that the Government should direct the £13.2 billion assigned to its Warm Homes Plan towards measures that cut bills fastest, and use regulation rather than grant money to drive the heat pump rollout1.
The report, No country for cold homes, funded by the European Climate Foundation, says loft insulation, cavity wall filling and solar panels give the biggest reduction in bills per pound spent. It states that loft insulation is ten times more cost effective at bringing down bills than a heat pump2. On that basis it estimates permanent bill savings of 14 per cent, or £230 a year on average, for households in the poorest fifth living in homes rated EPC D or lower, equivalent to 2 per cent of disposable incomes1. The Foundation notes the lowest-income households spend twice as much of their budgets on energy, at 10 per cent for the poorest quintile against 5 per cent for the richest1.
The report says the money is not sufficient to fully upgrade the nearly 13 million English homes rated EPC D or worse, and that grants should therefore be tightly targeted by income rather than by benefit receipt or postcode1. It gives these eligibility comparisons:
| Eligibility approach | Share of poorest homeowners eligible |
|---|---|
| Earnings limit of £36,000 | 97 per cent |
| Welfare system | 30 per cent |
| Area-based | 27 per cent |
Source: Resolution Foundation1
The Foundation also urges ministers to exclude landlords from grants and to use regulation to raise efficiency standards in privately rented homes, and to compel manufacturers and housebuilders on heat pumps before eventually regulating consumers1. It notes the plan includes £5 billion of spending classed as financial transactions, meaning loans that must be repaid rather than grants, and that these sit outside the Government's fiscal rules2. It says heat pump installations need to rise more than four-fold, from 98,000 to 450,000 a year by 2030, to meet national carbon targets2.
"Taxpayer money spent through the Warm Homes Plan must be well-targeted, focusing on the measures that have the biggest impact on bills and targeting households most likely to struggle with energy costs."
Why it matters for households
The report sets out a choice about where public money goes, and the answer affects which homes get help first. If eligibility follows income, as the Foundation recommends, more low-income owner-occupiers in leaky homes would qualify than under benefit-based or area-based rules, though the report acknowledges an income test is more complicated to deliver2. Its estimate of £230 a year applies to the poorest fifth of households in homes rated EPC D or worse, and is presented as a permanent reduction rather than a one-off payment1. For homes heated by gas, the report treats insulation and solar as the cheaper route to lower bills, with heat pumps framed as the emissions measure to be driven by regulation instead of grant funding2. The report does not set out eligibility rules for Scotland, Wales or Northern Ireland; its figures cover England1. Existing devolved grant routes are covered in the grants-schemes hub and in the guidance on Warmer Homes Scotland measures, while income-based support in England and Northern Ireland is set out under help for low-income households in England and help for low-income households in Northern Ireland.
What happens next
The Warm Homes Plan had not been published at the time of the report, which describes it as upcoming and assesses how it should be shaped2. No date for publication, and no Government response to the report, has been reported1.
Sources2 cited
- The Government’s £13bn Warm Homes Plan must focus spending on bill-cutting measures to save £230 for the poorest households • Resolution Foundation, resolutionfoundation.org
- No country for cold homes • Resolution Foundation, resolutionfoundation.org