Autumn Budget 2026: InstaGroup welcomes Warm Home Loan Scheme, but warns £1bn Warm Homes Plan cut risks further delay
Energy efficiency specialist InstaGroup has given a broadly positive response to the Autumn Budget, welcoming the protection of the Boiler Upgrade Scheme, the removal of gas standing charges and the new Warm Homes Loan Scheme.
However, it warns that a £1bn cut to the Warm Homes Plan, set out in the Budget policy paper, risks denting investor confidence and further delaying delivery.
Delivering the Budget on 28 October, Chancellor John Healey set a new goal to bring UK energy costs down in line with Europe, with cheaper energy the Government’s first priority and “clean power key to achieving this”. Measures to help households with energy bills include extending the VAT cut on household electricity to July 2027, removing gas standing charges from household gas bills, and a £100 energy payment this winter for 20 million households in Council Tax bands A to D.
For the home energy sector, a significant change is a £1bn cut to grant funding in the £15bn Warm Homes Plan. While the Budget does not set out how or when the reduction will be applied across the plan’s funding streams, DESNZ is expected to confirm this over the coming months.
The Budget does confirm that the Boiler Upgrade Scheme will be maintained at £400m in 2027-28, rising broadly in line with inflation thereafter. Grant values remain up to £7,500 towards an air or ground source heat pump, or £9,000 for homes replacing oil or LPG heating until March 2027.
The cut comes ten months after the Warm Homes Plan was published in January 2026, setting out ambitions to upgrade up to five million homes and lift up to one million families out of fuel poverty by 2030. These ambitions include solar panels on up to three million roofs and more than 450,000 heat pump installations a year.
The Warm Homes Loan Scheme
The day before the Budget, the Government formally launched the Warm Homes Loan Scheme, which gives homeowners and private landlords across the UK access to low- and zero-interest finance for home energy upgrades.
Ten initial lenders are offering loans at up to 5% below their usual rates, with borrowing caps of £15,000 for solar panels, £20,000 for air-source heat pumps and £35,000 for ground-source heat pumps. All funded installations must be carried out by MCS-certified installers. Battery storage is listed as eligible, with a £15,000 cap, but questions have been raised over whether MCS-approved batteries are yet available under the scheme.
InstaGroup welcomes the scheme as a positive step. With less grant funding available through the Warm Homes Plan, it believes affordable finance is more important than ever, and the priority should be confirming the details and getting the scheme up and running quickly.
Further announcements saw confirmation of a £100m top-up to the Warm Homes: Social Housing Fund for solar installations, and an extra £335m for Warm Homes schemes next year, with eligibility set to be confirmed in a Government White Paper on devolved delivery. However, the 0% VAT rate on energy-saving materials has not been extended, so solar panels, batteries, heat pumps and insulation will return to 5% VAT from 1 April 2027.
InstaGroup’s view
David Robson, CEO of InstaGroup, said: “Overall, this Autumn Budget is a net positive, and certainly something the home energy industry can work with. Protecting the Boiler Upgrade Scheme is vital. Its budget has been trimmed but keeping it in place means the heat pump roll-out can keep building. Removing standing charges from gas bills is also a good move, because it rewards households for using less energy and strengthens the case for switching from gas to electric heating.
“The £1bn cut to the Warm Homes Plan is a concern. That funding was only committed in January and changing it this soon risks undermining investor confidence. Much of the plan’s delivery is still to get going, and DESNZ now has to work out where the cut falls across each funding stream, which will delay things further.
“That makes the Warm Homes Loan Scheme even more important. It’s a very positive step, but we need to see the full detail quickly and get it working on a country-wide scale. The return to 5% VAT on energy efficiency installs next year is less helpful, however, and it adds cost just when we need more households to act.
“With energy bills forecast to rise sharply again in January, the argument for moving further away from fossil fuels has never been clearer. Batteries, heat pumps, and solar are not just good news for the planet, for many households, they now make a lot of financial sense too.”
InstaGroup has more than 45 years’ experience in UK energy efficiency, and more than 25 years delivering funded home-upgrade programmes. Its work spans heat pumps, solar PV, battery storage and insulation, delivered through the UK’s largest and longest-running installer network. It will continue to monitor developments and keep customers and installers updated as more information becomes available.
