The Resolution Foundation published its recommendations for the government’s Warm Homes Plan in its No Country for Cold Homes report, and said ministers needed to be clear about its scope, what it will achieve and who will benefit.
The initiative was announced by the Department for Energy Security and Net Zero (DESNZ) last year, with intentions to upgrade 300,000 homes and improve the take-up of heat pumps.
Some £13.2bn has been made available through the Warm Homes Plan over a five-year period, and £5bn has been set aside for loans, separate from grant funding.
Make heat pumps the only option
The Resolution Foundation said policymakers should balance reducing energy bills with spending to speed up the installation of heat pumps, saying this needed to increase by more than fourfold by 2030 to meet targets.
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It added that energy-saving measures alone would not lead to full decarbonisation of the housing stock, as some demand will still require carbon-emitting heat sources.
The report said heat pumps were the most effective way to reduce emissions from homes, and policymakers should introduce regulations to make manufacturers sell them and housebuilders install them.
It said that although it made sense to prioritise insulation to bring down bills and reduce emissions, this should not mean “giving up on decarbonising home heating”.
The Resolution Foundation said as well as making manufacturers sell heat pumps and housebuilders install them, the government should regulate consumers so they are the only option to replace a broken boiler.
It said the roll-out of heat pumps was “not going to plan” and funding through the scheme could close the gap, but this could come at the cost of fewer insulated homes.
Supporting low-income households
The report said allocating funds to poorer families would contribute to lower carbon emissions, adding that low-income households were twice as exposed to energy costs compared to their richer counterparts.
It said the limited resources of the Warm Homes Plan meant it should be targeted to those who would benefit most. The Resolution Foundation suggested basing eligibility on income, and maybe considering a combination of household income and non-pension wealth.
It suggested that an earnings limit of £36,000 could see 97% of the poorest homeowners eligible for the scheme, compared to 30% if based on the welfare system and 27% if determined by location.
The organisation said the government should “think hard” before allocating funds to properties that could be influenced through regulation, such as energy-efficiency requirements in the private rented sector (PRS).
The Resolution Foundation said loans would be more appropriate for middle-income households, who may be excluded from schemes but still have financial constraints. It suggested providing loans to companies instead, so they could install insulation and clean heat measures in homes.
