Delivering the full £13.2bn Warm Homes Plan, as pledged in the Labour manifesto, would represent one of the most competitive infrastructure investments available to the UK government. E3G analysis finds that public investment in home energy efficiency would deliver significant and sustained economic returns, while simultaneously supporting wider government objectives related to growth, health, energy security, and regional development.
The Warm Homes Plan would direct investment into local economies, particularly in areas of high deprivation, while reducing household energy bills, creating thousands of skilled jobs, and strengthening the UK’s resilience to external energy price shocks. It presents a strategic opportunity to modernise the energy system as the UK transitions from reliance on gas towards clean, electric heating.
The briefing assesses three investment scenarios:
- A low ambition £6bn pathway.
- The £13.2bn Warm Homes Plan aligned with the Labour manifesto.
- A £26.4bn pathway meeting the Committee on Climate Change’s (CCC) recommendations.
Through this analysis, we find that delivering the £13.2bn Warm Homes Plan strikes the most effective balance between ambition, impact, and deliverability. The government should therefore deliver on its manifesto commitment as a minimum to drive economic growth, support emissions reductions, and meet statutory fuel poverty targets.
Energy efficiency as a driver of growth
Energy savings generated through home upgrades act as a productivity gain for the economy. Reducing household spending on energy enables greater expenditure elsewhere, thereby supporting wider economic growth. E3G modelling shows that delivering the full Warm Homes Plan would boost GDP by 0.08 percent, while a CCC-aligned investment would deliver a 0.17 percent increase over 20 years. In comparison, major infrastructure investments such as the £19bn Elizabeth Line are projected to deliver similar GDP growth but over a significantly longer timescale.
Delivering jobs, savings and health benefits through strengthening energy security
The benefits of investment in home retrofit are wide-ranging. A £13.2bn investment would support the installation of 1.2 million heat pumps, 1 million solar arrays, and insulation upgrades for 2.7 million roofs and walls. It would also create 9,000 additional skilled jobs annually across the UK, particularly in regions with higher levels of deprivation.
In addition, the Warm Homes Plan would deliver average annual energy bill savings of £220 for 3 million households, targeted at those most in need of support. Warmer, healthier homes would also deliver wider economic and social benefits, including £8.7bn in health and wellbeing gains, contributing to reduced demand on the NHS and supporting government ambitions for a fairer society.
Reducing domestic gas consumption is critical to improving the UK’s energy security. Heating and cooking currently account for 34 percent of the UK’s total gas demand, a greater share than gas used in power generation. Fully delivering the Warm Homes Plan would cut domestic gas use by 13 percent by 2035, saving households and the economy nearly £10bn in gas import costs over the next decade.
See below for a summary of the different investment scenarios, illustrating the scale of opportunity at stake.
The full analysis, including detailed findings and modelling, is available in the full briefing here.
