£12.7 billion needs to be spent by 2025 to upgrade efficiency of Britain's housing stock, think tank warns

Using the money to retrofit old and energy-inefficient housing stock would save the average family £500 a year, the Institute for Public Policy Research (IPPR) found, with almost all UK houses in need of upgrades.

With Government support for businesses due to begin tapering in April, and the energy price cap raised, there are fears energy costs will continue to be a growing burden on national, household and businesses’ budget sheets.

One such firm, the Stump Cross Caverns in the Yorkshire Dales, received an energy bill of £7,282.65 for the month.

The owner of the North Yorkshire tourist attraction said her entire business model could need to be changed if the bills continue to rise and has urgently asked an electrician to assess if any mistakes have been made, but has been told by British Gas they’re confident the bill is correct.

The IPPR research found a total of £12.7 billion of public funding is needed to boost home insulation by 2025, of which there is currently a shortfall of at least £2.4 billion.

Furthermore, while £5.1 billion of government spending is needed on heat pumps, there is a shortfall in planned spending of £3.4 billion - 67 per cent.

IPPR analysis shows that the government is also falling short of its own manifesto commitment to spend £9.2 billion during this parliament on energy efficiency, by £2.6 billion.

Retrofitting homes with a combination of energy efficiency measures like insulation and low carbon heating would save the average household £500 on energy bills after the new £3,000 Energy Price Guarantee comes into effect in April.

Previous research by IPPR in September showed that almost all of England’s 24 million homes need to be upgraded with either energy efficiency measures, low-carbon heating or frequently both.

A nationwide scheme to retrofit all homes would not just help the UK reach its net zero targets, but it would also create up to 2.7 million direct and indirect jobs, boosting growth and supporting the levelling up agenda.

The upcoming rise in the energy price cap comes as new figures yesterday showed real wages were shrinking at their fastest rate since the 2008 recession.

The ONS data showed wages had technically grown at the fastest rate in 20 years, but were still not keeping pace with inflation, meaning in real terms workers saw a cut of 3.9 per cent in September to November, compared with the year before.

Meanwhile Labour yesterday urged the Government to rule out a potential rise in fuel duty in the next budget, as new research showed a typical household in Yorkshire and the Humber will be spending £267 more per year on petrol and diesel than at the start of this Parliament in 2019.

A failure to act, Labour says, could add 12p to a litre of petrol which would be the greatest increase in petrol prices ever recorded.

Petrol prices remain at historic highs, with figures showing that unleaded petrol prices are still a third higher than in 2020.

Rachel Reeves MP, Labour’s Shadow Chancellor said: “Many families will be asking themselves whether they feel better off under the Tories, or whether anything is working better now than it did 13 years ago.

“The answer will be no. With so many families and businesses reliant on their cars, the government must rule out yet another fuel duty rise at the budget to ease some of those pressures and prevent yet another shock to our economy.”