The Role of Insulation in The Warm Homes Plan

The Government’s recently unveiled Warm Homes Plan[1] is a major £15 billion investment in upgrading Britain’s homes. It is a significant intervention, promising to reduce emissions, upgrade five million homes and lift a million families out of fuel poverty by 2030. The National Insulation Association welcomes both the ambition and the scale of funding.

Alongside the ambition, the Warm Homes Plan also signposts a significant change in approach. Where previous schemes prioritised insulation and reducing energy demand as a key first step in whole house retrofit projects, the Warm Homes Plan places greater weight on electrification like deploying heat pumps, solar PV and battery storage. This is reflected in Wave 3 of the Warm Homes: Social Housing Fund, which places a much greater emphasis on low carbon heating than previous waves, dedicating £2 billion in low‑interest loans for these technologies.

What Does “Cost-Effective” Mean?

The substance of the change in approach to insulation in the Plan is the commitment to supporting “cost-effective insulation where necessary”. That commitment is important, but a commitment without definition risks becoming meaningless in practice. In any funding scheme, providers naturally seek interventions that represent good value. The question is how cost-effectiveness is assessed. Cost-effectiveness should reflect not only immediate cost, but system value: the role insulation plays in making homes electrification-ready and protecting consumers over the long term.

Insulation as Enabling Infrastructure

To make the UK’s energy transition both achievable and affordable, we need insulation as a vital component of electrification and heat decarbonisation. The UK has some of the leakiest homes in Western Europe, and the reality is that many properties still need fabric improvements before clean heating technologies can perform as intended.

A heat pump’s efficiency is measured by its Coefficient of Performance (COP), the number of units of heat it produces for every unit of electricity it uses. In a well‑insulated home, a heat pump can usually reach a COP of 3–4, meaning it delivers three to four units of heat for each unit of electricity.

However, in a poorly insulated home, too much heat escapes too quickly. The heat pump must work much harder, and its COP can drop to around 2 or even lower, well below what the system is designed to achieve. When COP drops, electricity use rises. And because electricity is still more expensive than gas, a heat pump operating at a low COP can end up costing more to run than a gas boiler, not because the technology is flawed, but because the home is losing heat faster than the pump can efficiently replace it[2].

Without some level of insulation:

• Systems may be oversized
• Running costs can be higher than expected
• Resident comfort may suffer
• Customer confidence is undermined

Targeted fabric interventions can deliver substantial system benefits. Analysis shows that combining loft insulation, glazing replacement and external wall insulation (EWI) can reduce a home’s heat transfer coefficient (HTC) by approximately 60%, significantly lowering heat demand[3].

Insulation and electrification are not competing priorities; they are complementary ones. Insulation reduces electricity demand. Unless we address the “spark gap” (the price difference between electricity and gas) through pricing reform, many households without sufficient insulation will find heat pumps installed under the Warm Homes Plan are more expensive to run than their old gas boilers. That’s not a failure of heat pumps; it is a failure of system design.

Quality is key

The UK’s standard for retrofitting properties PAS 2035[4], recognises this need for a whole system approach. In practice this means that fabric measures are assessed and prioritised before heating upgrades are finalised. If delivery continues under PAS 2035, insulation remains structurally embedded in best practice retrofit design. When properly specified and installed, insulation:

• delivers permanent demand reduction
• lasts for decades
• requires little maintenance
• improves comfort and health outcomes
• and reduces exposure to volatile energy prices

Conclusion: finding the right balance

The Warm Homes Plan gets many things right: the scale of investment, the commitment to strengthened consumer protection and the intent to simplify delivery. While the direction of travel is positive, insulation cannot become an afterthought.

If ‘cost-effective insulation’ is to be the cornerstone of the Government’s approach, success will depend on how that term is defined and embedded within the scheme’s design. The definition must recognise insulation as enabling infrastructure within the home, rather than a marginal intervention.

This is not about enforcing a rigid “fabric first” hierarchy. Nor is it about resisting electrification. It is about balance. Clean heat technologies like heat pumps perform best in well insulated homes. The fundamentals haven’t changed. Heat still escapes through walls, roofs and floors. If we don’t address unnecessary heat loss, household bills will rise, and the wider benefits of electrification for consumers will be diluted. Unless we address heat loss where it matters, we risk undermining the very technologies we’re investing billions to deploy.

Delivering warm, affordable, low carbon homes therefore requires both clean heating and targeted demand reduction, working together. Fabric still has a central role to play in making that transition practical, affordable and fair

[1] Department for Energy Security and Net Zero, 2026. Warm Homes Plan. Published 21 January 2026. Available at: https://www.gov.uk/government/publications/warm-homes-plan

[2] Williams, A. & Thomson, M., 2023. Significance of insulation and heat pumps in decarbonising the UK. Journal of Energy and Power Technology, 5(1),. doi:10.21926/jept.2301003.

[3] Glew, D. et al., 2024. DEEP Report 2.04: Case Study 01BA. Prepared for Department for Energy Security and Net Zero (DESNZ). October 2024. Available at: https://assets.publishing.service.gov.uk/media/6717b36de319b91ef09e3848/2.04_DEEP_01BA.pdf

[4] RISE – Retrofit Information, Support and Expertise, 2026. Understanding PAS2035. Available at: https://riseretrofit.org.uk/articles/understanding-pas2035