Warm Homes Plan: a big step forward - but can it succeed without cheaper electricity?
Labour’s £15bn Warm Homes Plan is a genuinely significant and much-needed intervention. A multi-year commitment at this scale is exactly what the retrofit and clean heat market has been lacking: it gives households clearer support, and it gives industry a stronger basis to invest in skills, capacity, supply chains and delivery models. If implemented well, it could help upgrade up to five million homes and lift up to one million households out of fuel poverty by 2030.
BUT… and this is the part where I should apologise for raining on the parade.
If we are serious about moving at pace to net zero - and doing so in a way that the public experiences the transition from fossil fuels as better, cheaper and fairer - we need to adopt whole-systems thinking. The Warm Homes Plan is a powerful capital intervention (grants, loans, standards, delivery agencies). But the transition will be won or lost on a running-cost reality that households feel every month:
Electricity is still too expensive relative to gas.
Until that is addressed, the Warm Homes Plan will not deliver its maximum impact, and it leaves a huge open goal for critics to argue that public money is being spent on technologies that do not reliably reduce bills for ordinary households.
What the Plan does well: a pipeline that industry can build against
The Government’s own framing is clear: upgrade homes at scale, cut bills, tackle fuel poverty, and accelerate adoption of clean technologies such as solar PV, battery storage and heat pumps, underpinned by a new national delivery architecture (including a Warm Homes Agency).
Broadly, the offer combines:
targeted, fully funded upgrades for low-income and fuel-poor households,
low and zero-interest finance options to reduce the upfront barrier for “able-to-pay” households, and
stronger expectations on rented homes and new builds to raise the floor on standards over time.
For the built environment supply chain, this is the right direction of travel: retrofit does not scale on good intentions alone; it scales on confidence and predictability.
The missing lever: electricity price reform (and why it matters more than another grant)
Here is the core issue. Even when heat pumps are technically efficient, households do not adopt at scale unless the economics are compelling and easy to understand. In the UK, electricity prices remain unusually high relative to gas, also known as the ‘spark gap’, a well-recognised barrier to electrification. The Climate Change Committee has explicitly flagged the UK’s high electricity-to-gas price ratio as a barrier to switching to electricity.
Why does this persist?
Wholesale power prices in the UK are shaped by a marginal pricing structure where gas often influences the market clearing price even as renewables grow.
UK electricity prices have also been high by international comparison and are strongly affected by gas price dynamics.
The practical consequence is straightforward: households don’t consistently feel the benefit of increasingly low-cost renewables in their unit rates, which undermines the business case for electrifying heat. And without that running-cost “pull”, the Warm Homes Plan risks becoming a programme that relies permanently on subsidy and persuasion, rather than becoming self-sustaining.
Why this matters politically: don’t hand the narrative to the loudest critics
This is not an abstract policy debate. If households install low-carbon tech and do not see clear bill reductions, you create the conditions for a backlash. We are already seeing elements of that critique: Reform’s deputy leader Richard Tice, for example, has attacked the plan as a “waste” of taxpayer cash (including claims about imports).
Whether you agree with that view or not, it illustrates the reputational risk: capital spend without visible household benefit becomes an easy target. The best defence is not comms spin; it is outcomes. And the strongest way to turn outcomes into mass adoption is to fix the running-cost signal.
Scotland: delivery ambition is strong, but a key lever is reserved
The Scotland angle is where “whole-systems thinking” becomes unavoidable. Scotland has moved faster than most on the new-build regulatory direction, and it is funding clean heat and energy efficiency through its own programmes. But the biggest household adoption lever - electricity price reform - sits primarily with Westminster.
That’s why Scotland’s Housing Secretary, Màiri McAllan, has criticised the Warm Homes Plan as a “missed opportunity” for lacking promised detail on long-term electricity price reform, reiterating calls for a targeted social tariff that could materially reduce bills for many households.
In other words: Scotland can drive standards, grants and delivery models - but if the UK-wide electricity pricing framework continues to work against electrification, uptake will lag, and the pathway to net zero heat becomes harder, slower and more politically fragile.
The conclusion: this is a strong start - now let’s close the loop!
The Warm Homes Plan is the kind of long-term commitment the sector has called for. It can unlock delivery, scale, skills and investment. But if the UK government wants this to land as a nationwide success - especially in Scotland, where delivery ambition is high and political scrutiny is sharp - it needs to pair capital support with electricity price reform. Put simply - the clean heat transition won’t succeed if we merely make clean tech available. It will succeed when households feel it is simpler, warmer and cheaper - and that will be when the price of electricity finally reflects the promise of low-cost renewables, making clean heat a no-brainer.