A £1bn insulation scheme is being overhauled by ministers after fewer than 10 per cent of target homes were made more energy efficient.
Ministers have set out plans to redesign a flagship policy that was introduced to make hundreds of thousands of homes warmer amid government fears targets will be missed.
And ministers are under pressure to set out plans to mitigate the impact of the cut during a winter where energy bills will rise yet again.
The proposed overhaul of the insulation scheme comes as the Government pledged to boost the number of homes eligible for support in replacing an existing boiler with a heat pump.
The measures are part of a “warm homes plan” for installing clean heating and insulating more homes across the country announced by the Department for Energy Security and Net Zero (DESNZ).
An extra £30m has been ring-fenced to offer £7,500 off the cost of a heat pump alongside a relaxation of planning rules to make them easier to install.
And following talks with Government, energy companies announced on Wednesday they would spend a combined £500m to help customers struggling with bills this winter.
Companies will lend money to people to help cover costs, reduce standing charges, which make up a segment of all energy bills, and help fund a national debt advice campaign.
DESNZ also quietly published a consultation proposing to change the Great British Insulation Scheme which has been criticised for failing to deliver at pace.
The scheme was launched in March 2023, following the spike in energy prices, with the aim of making 300,000 poorly insulated homes more efficient by 2026, saving money on energy bills.
But according to the latest figures, only 24,400 households had received upgrades as of August this year with the majority having cavity wall or loft insulation installed.
New heat pump rules and other measures
According to the government homeowners in England and Wales can apply for a £7,500 heat pump grant through the Boiler Upgrade Scheme.
Households can install an air source heat pump without needing to submit a planning application in England.
In addition social housing residents, lower income householders and renters will receive funded energy efficiency upgrades – including insulation and low-carbon heating – through the Warm Homes: Social Housing Fund and Warm Homes: Local Grant respectively.
Just over a third (34 per cent) of the households upgraded were classed as “low-income”.
Government documents warn that, at its current rate, it will miss its targets.
“There is strong evidence that GBIS is proving more difficult and costly to deliver than was originally estimated,” the Government consultation said, pointing to installation rates falling behind and higher than expected costs for suppliers.
“Several market barriers and failures exist in the energy efficiency market, preventing the deployment of measures in the absence of government intervention. Without intervention, many households will struggle to pay their bills.”
The Government estimates that GBIS, alongside the longer standing Energy Company Obligation 4 scheme for improving efficiency in other areas, could take between £230 and £430 off household bills every year if successful.
And improving insulation of homes was a key campaign pledge from the Labour Party ahead of the election earlier this year.
The Government is proposing overhauling the scheme to widen the scope for what measures can be installed by suppliers.
Currently only one type of insulation can be installed per household – to increase the number of homes impacted – but the government argues this should be scrapped to allow for multiple upgrades, making it better value for money for providers.
The consultation also proposes including the installation of smart thermostats, that allow the heating to be controlled remotely via smartphone, as a measure that could be applied to low income homes.
And ministers are proposing allowing other energy efficiency measures to count towards the GBIS.
The Government said it was putting £1bn into making homes warmer, more efficient and cheaper to heat in the coming financial year, including funds for insulating and upgrading social housing and other homes and £295m for the “boiler upgrade scheme”, which provides grants for heat pumps.
Along with investment from social housing providers and energy supplier obligations, paid for by bills, there will be around £3.2bn in funding for warmer homes in 2025-2026 – helping around 300,000 households, officials said.
It also announced a “reformed” clean heat market mechanism, delayed by the previous government, in April 2025, requiring 6 per cent of sales by boiler manufacturers to be heat pumps or for them to pay a charge for each missed installation.
It said the new version of the scheme, with the charge reduced from £3,000 to £500 for the first year with consultation on further years, would give manufacturers – who pushed back against what they called the “boiler tax” – the time they need to scale up supply chains.
And there would be Government support for every heat pump installation that is required under the mechanism in 2025-2026, officials said.
