Retreat on funding has ‘shaken’ confidence in Labour’s Warm Homes Plan

Labour has been urged to provide a long-term funding commitment for its Warm Homes Plan after scaling back its pledge to spend £6 billion a year on energy efficiency upgrades.

More than 30 organisations, including National Energy Action, Generation Rent and Greenpeace, have signed an open statement expressing alarm over the retreat, warning it has “shaken” industry confidence.

The statement released by the environmental think tank E3G says funding uncertainty is “the key issue undermining industry confidence to invest in skills and supply chains”.

The Warm Homes Plan was a major component of Labour’s now abandoned commitment to increase government investment to £28 billion per year as part of its wider Green Prosperity Plan. This included spending £6 billion per year over the next decade to upgrade 19 million homes to an energy efficiency rating of at least C.

When she first made the pledge in 2021, shadow chancellor Rachel Reeves said a Labour government would invest £28 billion in every year of this decade, but it was later scaled back to £28 billion per year by the second half of the next parliament.

Sir Keir Starmer made clear in January that the party would not break its self-imposed fiscal rules to meet the target, and in February, the Labour leader dropped the £28 billion commitment entirely. He said his government would instead ramp up investment to under £15 billion per year, less than a third of which (£4.7 billion) would be new funding.

The move came after the Treasury controversially published its own disputed estimates, which suggested the Warm Homes Plan alone would cost £12-15 billion per year.

Under the revised proposals, E3G said Labour is now planning to spend £13.2 billion on energy efficiency over the next parliament – or around £2.64 billion per year. Although this represents an “uptick” when compared to the £4.7 billion – or £0.9 billion per year – currently allocated by the government, the think tank said it is “far below” Labour’s original commitment of £60 billion over a decade.

The statement published by E3G says Labour must now “reconfirm and provide details” of its revised 10-year Warm Homes Plan, “setting out allocations for local authorities, social housing, public sector decarbonisation, and heat electrification”. It says the party should also confirm that it intends to maintain the Energy Company Obligation at least at the current levels until 2030, thereby providing £5 billion of targeted fuel-poverty support.

As regulation will be a “major driver of action and investment”, it says Labour should additionally confirm the planned uplift to minimum energy efficiency standards in the private rented sector and move forward with the proposed standards for the social rented sector.

The statement also calls on the party to introduce stamp duty incentives to encourage homebuyers to upgrade properties and create an independent national and regional advice service to help people to retrofit their homes.

“The UK hasn’t always been such a laggard on energy efficiency: industry was delivering over 1 million loft insulations in 2005,” the statement concludes.

“But a lack of clear long-term direction has led to a collapse in investment in retrofit supply chains and local authority capacity. With the right long-term plan and funding in place, Britain can once again gear up towards the scale it has achieved previously.”

Juliet Philips, UK energy lead for E3G, said: “By 2030, the UK is committed to upgrade all fuel poor homes and make significant reductions to carbon emissions. To make this possible, upgrading our homes must become a national infrastructure priority.

“This will require a commitment to long-term funding to make clean heat and warm homes available for everyone – while providing industry with much-needed certainty to invest in skills and supply chains.

“Whichever party wins the general election will need a laser focus on boosting sluggish delivery rates, as well as providing the enabling regulations to spur action and investment.”