Energy minister says Warm Homes Plan will not be impacted by defence savings

Mr McCluskey said the Warm Homes Plan has an “integral” part to play in this crisis.

 

He also felt it was “important” to give an explanation regarding the Defence Investment Plan.

 

“We are facing some of the most significant defence challenges this country has faced in a generation, not just what we’re seeing... on the front line in Ukraine against Russia, but also challenges that we’ve never faced before, from the likes of China and elsewhere,” Mr McCluskey said.

 

“The government has a duty to make sure that we defend the population and that we are well equipped to deal with some of the security challenges that this country faces, which are rapidly, rapidly evolving.”

 

Integrating funding under the Warm Homes Plan

 

The circa-£5bn Warm Homes Fund was unveiled as part of the Warm Homes Plan, which was first announced in January and updated in March.

 

The plan includes £854m available through the Warm Homes: Social Housing Fund (WH:SHF) for the sector for 2026-27, following a £100m top-up in April and £295m increase in January.

 

As part of the plan, DESNZ has previously said it intends to integrate the WH:SHF and Warm Homes: Local Grant (WH:LG) into a single scheme for low‑income households.

 

The WH:LG, which is delivered by local authorities, provides grants for energy performance upgrades and low-carbon heating to low-income households living in the worst-quality privately owned homes.

 

Mr McCluskey told delegates: “From 2028 we plan to consolidate and integrate these schemes into a single scheme for low-income households, still focused on an area-based delivery.

 

“And we know we can only achieve our mission if we take homeowners, landlords and businesses with us, and that they trust that upgrading their buildings is an attractive and viable option, and that local problems need local solutions.”

 

This area-based focus for the new integrated fund was first mentioned in the Warm Homes Plan.

 

When asked about this and whether DESNZ will be maintaining delivery through its current method or changing the model, Mr McCluskey said “it’s a bit of both”.

 

This is because in many areas, the department can learn from models that have already worked “very effectively” in local government, alongside social housing organisations and other bodies, he said.

 

Mr McCluskey said that several mayoral authorities, such as the Greater Manchester Combined Authority, and local authorities have achieved a “huge amount of work” on rolling out area-based schemes.

“It’s partly about learning what’s already going on, but then it’s also about expanding that and making sure it’s built into the scheme design,” he said.

 

“We want to see the likes of [distribution network operators], social housing organisations, landlords and local authorities being able to work together... in an area in order to provide upgrades to people’s homes.

 

“That’s going to be central to the scheme design, but we are in that process of scheme design at the moment.”

 

Extra funding for new heat network requirements

 

Mr McCluskey was also asked whether social housing providers will receive funding for new heat network requirements.

 

DESNZ expects heat networks to provide up to 20 per cent of the country’s heat by 2050 and believes heat network zoning is one of the best ways to achieve this.

 

In its response to a consultation, the government said it will establish new zoning bodies. These agencies will administer heat network zones in partnership with local communities, identify the best sites for heat networks across England and appoint developers to build and operate them.

 

Mr McCluskey said that in terms of further funding for social housing providers to meet new heat network requirements, DESNZ has the Warm Homes Fund and is “already having conversations” with the National Wealth Fund (NWF).

 

He said: “That consultation just closed recently. We’ve had a lot of input from local authorities, heat network providers and others about how we might be able to look at using some of the Warm Homes Fund around that.

 

“I’m not rushing to any conclusions on this, because I think we need to examine the consultation responses, but there are conversations going on about how we might leverage funding.”

 

In its call for evidence on the Warm Homes Fund, which closed at the start of June, DESNZ said the NWF may play “an important role in the effective deployment” of the Warm Homes Fund. This could be through providing expertise in financial structuring, risk-sharing mechanisms and partnership models that leverage private sector investment.

 

Warm Homes Agency

 

Mr McCluskey said the government is also currently working on its new Warm Homes Agency and hopes that it will be launched either this year or next year.

 

This will be a dedicated public body to support the delivery of the Warm Homes Plan.

 

As set out in the plan, the agency will streamline and consolidate existing organisations previously involved in delivering home upgrades across government and the regulator, Ofgem.

 

“The Warm Homes Agency is not intended to run over anything that local authorities or mayoral authorities are already doing, it’s about adding to what’s already out there,” Mr McCluskey said.

 

“I know there has been some nervousness among mayoral authorities and local authorities specifically, that what we might do is replicate what we’re already doing. That is not the intention.

 

“The intention is very simple: bring all the schemes that are already existing, bring the people who are working on them, who are currently spread across Salix, Ofgem and DESNZ, put them under one roof.

 

Mr McCluskey said this will allow for a “unified approach to schemes, and then also provide the advice and guidance that’s needed to provide a level playing field across the country”.