The government announced at Budget 2025 that funding for the Energy Company Obligation (ECO) would end in March 2026, according to a House of Commons Library briefing on the energy efficiency of UK homes1. ECO measures will continue until the end of 20261. The scheme has been the main domestic energy efficiency programme of the past decade, funded by a levy on household energy bills, with the government setting the overall targets and rules1.
The Library briefing records that ECO delivered 4.4 million measures in 2.6 million homes between 2013 and December 20251. The number of measures fell during the second half of the 2010s, from more than 80,000 per month in early 2014 to less than 20,000 per month on average from mid-2016 to mid-20201. The regulator Ofgem described a "significant drop" in April 2014, when the government reduced part of the target for suppliers in order to help reduce energy bills1.
The Budget change shifts support from a supplier obligation model to public funding through the Warm Homes Plan1. Energy UK, the energy industry trade association, states that the government took action to reduce bills by £134 for a typical Direct Debit customer through two measures: moving 75% of the Renewables Obligation off the bill and into general taxation, and ending the charge that paid for ECO2. Energy UK records that Ofgem has set the price cap from 1 April 2026 at £1,641 for a typical dual-fuel household paying by Direct Debit, on average £117 cheaper than the previous cap period2. ScottishPower states that from 1 April 2026 prices will go down for all its tariffs, with the savings continuing for three years, subject to the government confirming the grant funding requirements3.
The MCS Foundation, a charity, states that the Energy Company Obligation was being scrapped entirely and that the part funding of the Renewables Obligation is set to last only until 2029, with the Office for Budget Responsibility predicting levies will rise by a third by 20314. Its separate report puts the levy share of an electricity bill at around 17%, against 6% for gas, and says moving levies into general taxation would save households between £170 and £530 a year5. Energy UK gives a lower figure for the levy share, stating that levies currently make up around 17% of an electricity bill in one publication and that social and environmental levies add around 9% in another5. The two figures are not reconciled in the material.
The Library briefing sets out the insulation gap that remains. At the end of 2025 an estimated 5.0 million properties in Great Britain with cavity walls had no cavity wall insulation, 23% of the total; around 7.7 million homes with lofts, 29%, had less than 125mm of loft insulation; and 7.6 million homes with solid walls, 89% of the total, had no solid wall insulation1. On average energy efficiency ratings, homes in Northern Ireland had the highest average rating, followed by Scotland and England, with the lowest average rating in Wales1. In England the share of homes at band C or higher rose from 12% in 2010 to 56% in 20241. The government has a target that all fuel-poor homes should be at least band C by 2030, and an aspiration for as many homes as possible to reach band C by 20351.
Why it matters for households
ECO grants were funded through a levy on bills rather than by the household receiving the measure, so the scheme's end changes how supplier-funded grants are paid for and who can access them. The removal of the ECO levy from April 2026 lowers the levy component of every electricity bill, while the remaining support route named in the briefing is public funding through the Warm Homes Plan1. For a household that had been considering ECO4 insulation or heating measures, the practical position is that measures continue until the end of 2026 and the funding model changes afterwards1. The briefing does not set out what replaces ECO for individual households beyond the Warm Homes Plan, and no eligibility rules for any successor scheme are given1.
The scale of the remaining work is the other consequence. With 5.0 million cavity walls uninsulated, 7.7 million lofts under-insulated and 7.6 million solid walls without insulation, the measures ECO funded address a large share of the housing stock1. Homes with solid walls, older homes, converted flats and bungalows have the lowest average ratings, and these are the property types least likely to reach band C without intervention1. Energy UK states that around 50% of homes are rated below EPC C and that improving energy efficiency would reduce bills permanently in the long term2. The MCS Foundation and Energy UK both argue that levies should be moved off electricity bills into general taxation, and both note that the Office for Budget Responsibility forecasts levies on electricity bills will rise by a third by 20315.
What happens next
ECO funding ends in March 2026, with ECO energy efficiency measures continuing until the end of 20261. The removal of the ECO levy from bills and the 75% Treasury funding of the Renewables Obligation take effect from 1 April 2026, with the Renewables Obligation arrangement running until April 20295. Ofgem's price cap from 1 April 2026 is set at £1,641 for a typical dual-fuel Direct Debit household2. The government has not published eligibility rules for a scheme replacing ECO for individual households.
Sources5 cited
- Energy efficiency of UK homes - House of Commons Library, commonslibrary.parliament.uk
- Energy UK Explains: April 2026 price cap - Energy UK, energy-uk.org.uk
- How the UK 2025 Autumn Budget will lower energy bills | ScottishPower, scottishpower.co.uk
- Cut The Cost - MCS Foundation, mcsfoundation.org.uk
- Households could save up to £530 if electricity levies moved off bills - new report - MCS Foundation, mcsfoundation.org.uk