Public warm homes funding will be slashed by an estimated 25% across the rest of this parliament after Rachel Reeves’ decision to axe the Energy Company Obligation (ECO) scheme.
In last month’s Budget, the Chancellor announced that the ECO will not be renewed when the current four-year scheme expires in March 2026. According to Budget documents, the energy supplier-funded ECO accounts for approximately 3% of annual electricity and gas bills, and Reeves’ decision to axe it is part of a broader package to help households with cost-of-living pressures.
The government estimates that its measures will take around £150 off energy bills from next April onwards.
To cushion the impact of ending the ECO, the Chancellor outlined that the government will provide an additional £1.5bn of capital investment to tackle fuel poverty through the Warm Homes Plan, on top of £13.2bn allocated across the life of this parliament in the summer’s comprehensive Spending Review.
However, consultancy E3G has estimated that ending the ECO scheme, which provided around £1.6bn per year for household energy efficiency and home decarbonisation works, will result in total green homes funding being cut by a quarter, from £20bn to £15bn, this parliamentary term.
