PolicyLens

Green - Housing energy

Insulate homes with GBP 29bn

Spend about GBP 29bn over five years on home insulation.

Last updated: May 2026.

Read the policy-specific methodology note

Policy baseline

The Green programme includes GBP 29bn over five years for insulation. Costs depend on housing stock, retrofit depth and labour supply.

  • Targets cold and inefficient homes.
  • Unit costs vary sharply by property.
  • Bill savings depend on quality.

Core trade-offs

The direct beneficiaries are households with upgraded homes and retrofit firms. The costs fall mainly on taxpayers and construction labour markets. The main economic question is poor delivery can leave low bill savings.

  • Households with upgraded homes and retrofit firms gain most directly.
  • Costs fall mainly on taxpayers and construction labour markets.
  • Key risk: poor delivery can leave low bill savings.

Fiscal impact by 2028-29

+GBP 4.0bn to +GBP 12.0bn. Central estimate: +GBP 5.8bn.

  • Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
  • Main channel is the scored tax, spending or delivery change.
  • Offsets depend on tax receipts, behaviour and pass-through.
  • Range reflects uncertain implementation and economic response.
  • This is not an official costing.

Economic impact by 2028-29

  • Jobs: Green construction and supply-chain jobs rise; fossil-linked jobs face transition risk.
  • Wages: Skilled retrofit and energy workers may gain; households gain only if bills fall.
  • Prices: Upfront costs are high; long-run energy bills may fall if delivery succeeds.
  • GDP / productivity: Potentially positive through lower energy imports and innovation; delivery bottlenecks can weaken returns.

Assessment

This is a real trade-off, not a free gain. Households with upgraded homes and retrofit firms benefit, while taxpayers and construction labour markets bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

  • Supply-chain limits: Skills, grid connections and materials can delay delivery.
  • Cost overruns: Retrofit and energy projects often face uncertain unit costs.
  • Weak additionality: Public money can replace private investment rather than add to it.

Safeguards

  • Publish project pipelines and unit costs.
  • Use competitive procurement where possible.
  • Report additional private investment mobilised.

Academic evidence

Andersson, American Economic Journal: Economic Policy, 2019

Carbon tax evidence

Sweden’s carbon tax reduced emissions while maintaining economic growth, but institutional context mattered.

Supports carbon-pricing benefits with design caveats.

Carbon Taxes and CO2 Emissions (2019)

UK government evidence

Green Party of England and Wales, 2024

Green manifesto

The manifesto defines the tax, spending, climate, housing and public-service proposals modelled here.

Used to define the scenario, not as an official costing.

Manifesto for a Fairer, Greener Country (2024)

Climate Change Committee, 2025

Climate progress report

CCC reports persistent delivery gaps across buildings, transport, power and land-use decarbonisation.

Supports the need for investment while cautioning on deliverability.

Progress in reducing emissions (2025)

HM Treasury, 2025

Spending Review baseline

Spending Review settlements set the counterfactual for departmental capital and resource budgets.

Used to separate new spending from existing baselines.

Spending Review 2025 (2025)

Sources

Other Green policies

PolicyLens estimates are illustrative and should not be treated as official costings.