The UK Government announced plans on Monday to pour £6bn ($7.6bn) into energy efficiency upgrades for homes and businesses between 2025 and 2028, with £1.5bn going to its Boiler Upgrade Scheme (BUS).

The UK currently has some of the least energy-efficient housing in Europe. The new funding will prioritise improving energy efficiency in low-income and social housing in a bid to keep heating homes at an affordable price as the country continues to feel the effects of the energy crisis, with £1.17bn allocated to decarbonising public sector buildings.

The announcement comes after the government faced criticism last month over Chancellor Jeremy Hunt’s autumn statement, which failed to mention any mandated improvements to energy efficiency and insulation for private housing.

Juliet Phillips, senior policy advisor at the climate think tank E3G, said in a statement at the time: “Millions of private rented households are stuck in cold, mouldy and leaky properties – including 1.6 million children – with no plan from the government to address this.”

Additional funding for the BUS, which currently offers a £7,500 grant to households looking to replace their traditional gas boilers with heat pumps, aims to boost uptake of cleaner heating systems.

Daniel Särefjord, CEO of heat pump developer Aira UK, said in an emailed statement: “The new £1.5bn funding for the Boiler Upgrade Scheme will drive investment and consumer confidence in the nation’s transition to cleaner, greener heat pumps… Heat pumps have been heating Scandinavian countries for decades and will be the solution to Britain’s energy crisis.”

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Energy Secretary Claire Coutinho said in a press statement: “Cutting energy bills is my top priority. Today’s funding will help those who are most in need and keep around a million more families warm during winter.” Her comments come despite the government’s energy regulator Ofgem announcing last month that the annual price cap for gas and electricity will increase by almost £100 for the average household.

Chancellor of the Exchequer Jeremy Hunt said: “Investing in energy efficiency combined with energy security is the only way to stop ourselves being at the mercy of international gas prices, one of the main drivers of inflation.”

The UK Conservative Party faced backlash from industry bodies and environmental groups after Prime Minister Rishi Sunak walked back on several key net-zero targets, including plans to ban the installation of gas boilers by 2025, at the end of September.

In his address, Sunak stated that some homes “will never ever be suitable for a heat pump”. Davide Sabbadint, deputy policy manager for climate at NGO the European Environmental Bureau, told a climate change conference held in London just days after Sunak’s announcement that some types of heat pumps can be installed in any home without any additional insulation work being required.

At the same conference, Nigel Banks, technical director at Octopus Energy, agreed that “you can fit a heat pump in almost any home”, adding that Sunak’s suggestion that 20% of houses could never have a heat pump installed is a “misnomer”.

The government statement on allocation for the £6bn energy efficiency funding now states that, under new plans, “all new homes and buildings will be zero-carbon ready from 2025, saving any further costs for families to future-proof their new home as we embrace clean heating”.

Octopus Energy recently unveiled its new own-brand, more affordable heat pump which, under the BUS, could be free for homes that do not require any additional work prior to installation. For houses that do require work, the system costs around £3,000, a significant drop from current price averages for heat pump installations, which sit between £7,000 and £15,000.