To achieve net zero, the UK’s housing stock must be decarbonised through improvements to energy efficiency and changes to heating systems. Simultaneously, heating costs need to come down, especially for the least affluent.

This analysis challenges the ‘fabric first’ approach, showing that heat pumps are up to 44 per cent cheaper than an insulation-only deep retrofit approach, with a cost per tonne of carbon saved that ranges from 6 to 13 times cheaper. The upfront and running costs of heat pumps are predicted to fall over time, as cheap renewables decarbonise electricity. In the short term, we suggest measures to bring down energy bill costs, such as enabling users to avoid peak times for electricity prices.

The government should adopt a heat pump led approach, retain support for the mass uptake of cheap loft and cavity wall insulation, and only pursue deep retrofit for appropriate fuel poor households.